► Jason's Portfolio + BUY and SELL alerts: https://patreon.com/jasonfieber Right now we have an opportunity to generate a relatively safe 34% annualized yield from one of the highest quality dividend growth stocks in the market. In today's video I’ll show you how to take advantage of this opportunity, as I walk you through a real-life "income trade" I just made with Dividend Champion PepsiCo (PEP) that generates around $400 in income in less than 30 days. That works out to an annualized yield that's over 10x more than what I'd collect if I were to rely on the stock’s dividends alone. The strategy I go over is one of my favorite ways to generate relatively safe, high income from world class stocks. DIVIDEND SAFETY SimplySafeDividends.com rates a company’s dividend safety by reviewing its key financial metrics. Dividend Safety Scores range from 0 to 100, and PEP gets an outstanding score of 93. VALUATION I blended the following valuation models to arrive at PEP's estimated fair value. Valuation Model 1: Current P/E vs. 5-year average P/E For the first model I use FAST Graphs to compare the stock’s current P/E ratio to its 5-year average P/E ratio. This is a model that uses relative valuation because we’re comparing the company’s current earnings multiple to its own historical earnings multiple. Using this method, we get an estimated fair value of $119. Valuation Model 2: Current Dividend Yield vs. Historical Dividend YieldFor the second valuation model we compare the stock’s current dividend yield to its 5-year average dividend yield. This is another model that uses relative valuation, only this time we’re not comparing P/E ratios, we’re comparing dividend yields. Using this method, we get an estimated fair value of $143. Valuation Model 3: Morningstar Star Rating For the third valuation model we use research from Morningstar. As Dave Van Knapp points out in his lesson on valuation (https://dailytradealert.com/dgi-lesson-11-valuation/), instead of using P/E ratios, Morningstar uses a discounted cash flow method for valuation, which many investors consider to be the best way to value a stock. Using this method, we get an estimated fair value of $140. Averaging the fair value estimates of the 3 different valuation models we used, we get a final estimated fair value of $134. RULES I FOLLOW WHEN SELLING COVERED CALL OPTIONS In general, I only do buy-write trades like what I did with PEP if: 1) I want to own the underlying stock anyways 2) I believe it’s trading at a reasonable price 3) I’m comfortable owning it for the long-haul in case the price drops significantly below my cost basis by expiration, and 4) I’m comfortable letting it go if shares get called away. 5) To be mindful of position sizing, except in rare cases, the value of my trade wouldn’t exceed 5% of my total portfolio value. 6) To minimize taxes and tax paperwork, I only make these trades in my retirement accounts. Please note: I’m not a registered financial advisor and the ideas I talk about in these videos aren’t specific recommendations for you as an individual. Everyone has different financial situations, risk tolerance, goals, time frames, etc. You should also be aware that some of the trade details (specifically stock prices and options premiums) are certain to change from the time I place my trade or do my research, to the time I film the video, to the time it gets edited, to the time it gets published… and to the time you’re watching this video! So PLEASE, don’t attempt to make this trade yourself without first doing your own due diligence and research. ABOUT: My name is Greg Patrick. I'm a dad 🚸... husband👫... travel enthusiast ✈️ 🗺️ ... amateur wood and DIY hobbyist 🔨... aspiring triathlete 🏃🏊🚴... and 1/2 of a music duo 🎵🎙️. I'm also the co-founder of 3 investment / trading sites and newsletters 📊: DailyTradeAlert.com, TradesOfTheDay.com and DividendsAndIncome.com. I've been investing for about two decades, and because of the nature of the business I'm in, I'm exposed to new ideas every single day. Whether you're new to investing or not, I hope something I share here can help you out in some way. #StocksToBuyNow #DividendStocksToBuyNow #HowToSellOptions LEGAL DISCLAIMER: Please consult with a licensed investment professional before investing any of your money. Never invest in a security or idea featured on this channel unless you can afford to lose your entire investment. If your money is not FDIC insured, it may decline in value. Greg is not a licensed financial advisor, tax professional, or stock broker and he does not purport to be. OPTIONS DISCLAIMER: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, investorservices@theocc.com.