Since AAPL doesn’t pay dividends, here’s a better idea for generating an additional stream of income off the Apple stocks you already own – Covered Calls.
This idea came to me from a comment by “Peter” to the article “Why Apple shares are dirt cheap“. Peter writes:
Seriously? The dividend argument? This is 2011, not 1971.
Write covered calls against the common stock. Even with extremely conservative strikes that will never be exercised, you can easily earn 2-5x the dividend return of other shares.
You cannot generate the same returns on those other dividend shares precisely because their boring growth rates do not generate enough IV to make CCs worth the effort.
70% institutional ownership. Who do you think is writing options every week and month, and then pinning it nearly every week and month at max pain? Dividends are peanuts compared to this income stream.