These high yielding stocks can grow your dividend income massively.
Buying stocks just for the high dividend yields is never a good strategy by itself.
But…if you can find a high yielding dividend stock with good technical support and favorable option trades, they can help your investment portfolio while potentially providing good capital appreciation.
Below are three great dividend stocks with yields from 4% or higher to consider buying right now.
Posting a solid dividend yield of 4.95%, the health technology and pharmaceutical giant GlaxoSmithKline (NYSE: GSK) is up over 10% year-to-date and the technical analysis looks favorable for more upside. GSK produces innovative prescription medicines, vaccines and healthcare products. They also won approval in India for a late stage trial of a Covid-19 candidate. I feel this puts them in a favorable position for the second half of the year.
NOTE: Earnings are coming out on July 28th with estimates coming in around .55 earnings per share.
Looking at the weekly chart, the stock has been consolidating in a corrective structure between $39 and $41.50 for about a month now. Overall the price action is constructively bullish and I’m watching for minor pullbacks towards the $39.60-$39.00 support zone as potential buy locations.
Looking at the option data and how option traders are positioned on this stock, we see about 110K calls out there and approximately 50K puts, so the market is call heavy. Currently about 45% of the options out there are rolling off this Friday which should create some changes in price and positioning heading into the end of the week. I think this will create a potential pullback, and thus possible buying opportunity.
If you’d like to learn more about trading options, click here.
But overall, I think this is a dividend stock to be considered for your investment portfolio.
Moving into the energy sector, WMB (NYSE: WMB) is performing well on the year, up over 31% YTD and sporting a 6.19% dividend. WMB is an American energy company whose main business is its natural gas processing and transportation, along with assets for generating electricity.
With a heat wave across the western US, energy demand should remain high, which leads us to believe energy plays should perform well.
Looking at the weekly chart, while up strongly on the year, currently WMB is in a small corrective pullback, with potential support levels below between 25.30-24.50, which seem like a solid support zone for potential longs.
Taking a look at the option positioning on WMB, currently about 35% of the options out there (~90K calls/50K puts) are about to expire this Friday. That should create some resistance through the end of the week. Protection is cheap on this stock with implied volatility below 30% for AUG puts around 50 delta, so overall favorable IMO for medium term long stock plays.
Staying in the energy sector, MPLX (NYSE: MPLX) is coming in heaviest in terms of yield with a whopping 9.3%. MPLX is connected to its parent company (Marathon Petroleum – NYSE: MPC) which provides about 50% of MPLX’s revenue.
While 2020 was a bit rocky for the company, MPLX has reported a distributable cash flow around $1.1 billion, which is up about 5% from a year ago. Currently the stock is up 34% YTD benefitting from the increase in oil prices.
Looking at the weekly chart below, we see price action very similar to WMB with a strong overall uptrend, while sporting a minor corrective pullback and a support zone just below.
Option traders are posting about 45K calls and 28K puts with about 40% of those options rolling off this Friday. I’m expecting resistance to hold for the rest of this week and a minor pullback into support.
FULL DISCLOSURE: Chris Capre has no stock or option positions any any of the stocks listed above. If you’d like to learn more about Chris’s live trades, you can get access via the Trading Masterclass where he shares his live trades and daily market analysis.