Ottawa Investment Advisor John Bruce

Generating Income on Non Dividend Paying Stocks

August 25, 2009

You don’t have to rely on dividend paying stocks to make dividend like income in your portfolio anymore.

Purchasing shares of high dividend paying companies is a great way to increase profits. The investor can stand to make an extra 5%, 10% or more over a one year time period. But there are many large companies out there that seem to never pay dividends, and may never do so. Instead, they use profits to fund acquisitions, aggressive research programs, or as rainy day reserves.

But what about investors who don’t want to sell their stock but would like to raise some cash? It’s probably the wrong time to sell these stocks but the cash would be nice.

Now it’s easier than ever to squeeze dividend-like income from your non-dividend paying stocks.

Here’s how it works…

Most stocks offer publicly traded options. You make these transactions with your broker, similar to buying and selling stocks. A call option gives another investor the right to buy shares from you at a price you set anytime before a certain date. You collect a premium by selling the call and you get the premium, in cash, on the day you sell the option. Just like a dividend.

One strategy is to sell “at-the-money” or “out-of-the-money” calls on your stocks (Covered Calls). This means the strike (expiration) price of the option is at or above the current stock price. If you set the strike price so high the stock doesn’t reach that price, then you pocket the premium while maintaining ownership of the stock.

Widely held, heavily-traded stocks like Microsoft , Google , and Ebay are perfect for this strategy. Option premiums fluctuate , so that is where you need the knowledge of your broker to determine when the option premium is high and has the most value when sold.

You can sell options each month, up to 12 times a year, after they expire . Keep in mind brokerage commissions and taxes will affect your actual returns.

Option trading strategies are not for everyone and may not be suitable for your portfolio. Please consult with me or your Financial Advisor prior to undertaking any Option strategy”

John S. Bruce
Investment Advisor
Mackie Research Capital
Direct Line- 613-425-3732
Toll Free- 866-860-4190

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“MRCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

The Technical Report For August 17 to August 21 2009

August 25, 2009

DJIA

  • Ended the week higher than the previous week and closed well above 7, 14 , 21 , and 50 day moving averages. Prices have been rising steadily and have gone back to September 2008 levels . Long-term trend is turning back up and starting to become more positive, however, the ( RSI) is moving up and out of Neutral territory and is starting to enter over bought territory (70+) which is used by bearish traders as a sell signal . .

TSX

  • Prices retreated from highs reached the previous week and spent all week slowly regaining lost ground to end just below where it had started on Monday. The last two weeks have ended strongly above the 50 week moving average. Long term trend has gone from neutral to positive , short- term trend continuing higher. – Relative Strength Index (RSI) has started to rise from neutral territory but has started to enter over bought level (70+) which is used by bearish traders as a sell signal.

John S. Bruce
Investment Advisor
Mackie Research Capital
Direct Line- 613-425-3732
Toll Free- 866-860-4190

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“MRCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

Technical Analysis Report for week ending August 7

August 12, 2009

DJIA

  • Ended the week higher than the previous week and closed well above 7, 14 , 21 , and 50 day moving averages. Prices have been rising steadily and have gone back to September 2008 levels . Long-term trend is turning back up and starting to become more positive, however, the ( RSI) is moving up and out of Neutral territory and is starting to enter over bought territory (70+) which is used by bearish traders as a sell signal.

TSX

  • Another strong week and managed to break above resistance set in June at 10726 to close above back at levels not seen since the October sell off . The last two weeks have ended strongly above the 50 week moving average. Long term trend has gone from neutral to positive , short- term trend continuing higher. – Relative Strength Index (RSI) has started to rise from neutral territory but has started to enter over bought level (70+) which is used by bearish traders as a sell signal.

*To find out how Technical Analysis can be used in your portfolio, call John Bruce 866-860-4190.

John S. Bruce
Investment Advisor
Mackie Research Capital
Direct Line- 613-425-3732
Toll Free- 866-860-4190

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“MRCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

Technical Analysis Report for week ending July 31

August 4, 2009

DJIA

  • Ended the week higher than the previous week and closed well above 7, 14 , 21 , and 50 day moving averages. Prices have been rising steadily and have gone back to September 2008 levels . Long-term trend is turning back up and starting to become more positive, however, the ( RSI) is moving up and out of Neutral territory and is starting to enter over bought territory (70+) which is used by bearish traders as a sell signal.

TSX

  • Another strong week and managed to break above resistance set in June at 10726 to close above back at levels not seen since the October sell off . The last two weeks have ended strongly above the 50 week moving average. Long term trend has gone from neutral to positive , short- term trend continuing higher. – Relative Strength Index (RSI) has started to rise from neutral territory but has not entered over bought level (70+) which is used by bearish traders as a sell signal.

*To find out how Technical Analysis can be used in your portfolio, call John Bruce 866-860-4190.

John S. Bruce
Investment Advisor
Mackie Research Capital
Direct Line- 613-425-3732
Toll Free- 866-860-4190

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“MRCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

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