Simon Property Group (SPG), Yield: 4.5%
(Selling Put Options)
Note: This members-only article is a follow-up to our free report titled: "5 Attractive Dividend Growth Options."
As we have written before, there's a false narrative going around that the Internet is going to put all "brick and mortar" stores out of business. And while this may be true for some stores, it's certainly not true for all of them. For example, we believe big-dividend (4.5% yield) Simon Property Group (SPG) isn't going out of business anytime soon (SPG owns and operates premium shopping malls). In fact, SPG is growing, its shares have inappropriately sold off, and it currently presents a very attractive buying opportunity for income-focused investors that would like to see some capital appreciation too (we believes the shares could easily trade 25% higher within the next year).
However, if you’re still not comfortable investing in SPG shares at the current price, you may want to consider selling put options because the fear surrounding this stock has caused premiums to be high which means you can generate some fairly attractive income by selling put options on SPG, as shown in the following table.
Specifically, we like the July 21 expiration contract with a strike price of $145. This means the shares can fall another 7.8% before the shares will get put to you, and considering you’d generate $1.54 in premium that means the shares can fall all the way to $143.46 before you’d lose money. And as we wrote in our recent SPG report (An Attractive, Big-Dividend, Contrarian Opportunity with Significant Upside) we actually like the shares at the current price, and we’d be happy to own big-dividend SPG at an even lower price if the put options get executed. If you are inclined to sell put options. we believe SPG currently offers an attractive opportunity.
