Dividend king. Investment idea.

NYSE:AB   AllianceBernstein Holding L.P.
I really like this stock. I'm holding hundreds since several months ago for the dividends and is a cheap stock (Yield 9.58%-$3.54 a year). This is the perfect time to buy and hold forever. Here is the strategy that I do, is very simple. Just buy at least 100 stocks, and keep buying on a drop 100 more and so on depends on your risk tolerance and cash available. Every time the stock is about to drop, write one or more cover calls depending how may are you holding.

Real case holding 100 stocks:
Dividend payout (every quarter): $3.54*100/4 = $88.5 this is what you get paid every quarter for holding 100 stocks
The stock was trading at $40 a few weeks back, that is a strong resistance and I thought it wasn't going to break it at the first attempt so I just wrote a cover call that expired in two weeks and strike price $40 for $70. The price dropped, it couldn't break the resistance, the two weeks passed and the cover call expired and I made $70 for each cover call. If I would have written a cover call that expired in a month I would have made $120. And now the stock is turning back up, I'm buying 100 more this upcoming week, I'm still holding all of them and getting my dividends paid each quarters. So just by holding 100 stocks and writing cover calls each time is about to correct for a year you can make more than $500 ($354 in dividends and the rest in cover calls approx.).

Hope it helps.


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