This is currently one of the strategies our Fund is deploying. We actually have a very small position like this in BlackRock so we thought this article might be usefull for our readers.
Striking Price | THURSDAY, JULY 19, 2012 Buy a Dividend Machine at a Discount By STEVEN M. SEARS
Use options to pick up shares of fund-giant BlackRock for less than the market rate.
Stop trying to catch the next new thing on Wall Street or searching for mythical 10-bagger stocks popularized by fund legend Peter Lynch almost 25 years ago. These aspirations are unrealistic for most investors. The more realistic approach is focusing on dividends that historically account for 45% of stock gains and not focusing on so-called 10-bagger stocks that have the potential to fall as dramatically as they rise. Lets use BlackRock ticker: BLK, the worlds largest money manager, to test out this sober approach. The $175 stock pays a $6 annual dividend that equates to a 3.4% dividend yield.Dividend-hungry investors can buy the stock and sell bearish puts to position to buy more of the stalled stock at a slight discount to market value. The stock is trading below its $183.13 book value. Investors are positioning to buy a best-in-breed stock at a discount to its ultimate value, while collecting a dividend more than double the 10-Year Treasurys 1.5% yield.