4 High Yield Tobacco Stocks to Enhance With Covered Calls

As yields on the 10-year U.S. Treasury briefly breached 3.0%, investors are clearly hungry for yield. For investors clamoring for yield, the goal should be to focus on assets that provide safe yield with the potential upside to the dividend in an inflationary environment. Large capitalization, dividend paying equities have helped fill the yield void for many investors. We provide analysis below on four U.S. tobacco companies that pay dividends in excess of the 10-year Treasury and provide investors with the potential for dividend growth in a strengthening economy (or an inflationary environment). Due to the recent weakness in the general market, we advise investors to contemplate overwriting out-of-the-money call options to further enhance their short-term yield on these stocks over the next 6-12 months (see covered call strategy below). 1) Altria Group, Inc. (MO) engages in the... Read more