I think that PotashCorp is a great income stock for an IRA. That's why I'm looking to add the company to my own IRA. However, instead of just buying the stock outright, I'm using a simple strategy that's actually boosting my overall yield by 50%. Here's what I did.

A surging dividend that's getting a boost
PotashCorp's dividend surged an astounding 950% since the fourth quarter of 2010. Its current yield is above both Agrium's and Mosaic's as the following slide points out.

Potashcorp Div

Source: PotashCorp Investor Presentation (Link opens a PDF) 

While a yield of around 4% is exceptional, I'm always looking for additional income. That's why I'm using a simple strategy to earn an additional 2% yield on PotashCorp's stock before I add it to my portfolio. That strategy is to write puts on PotashCorp instead of simply buying the stock outright or setting a limit order. In doing so, I was able to set myself up to buy PotashCorp at my desired price of $35 per share, which would lock in a 4% yield. Further, I was paid around $85 up front to write the puts, so I could potentially earn 6.4% of income on PotashCorp's stock this year as opposed to just 3.9% if I bought the stock today. My biggest risk is missing out on an opportunity to buy PotashCorp's stock as it could end above my $35 strike price at expiration, which would result in my not buying shares. However, I could potentially repeat the process and continue writing puts on PotashCorp until I do finally obtain shares.

Boosting yields
PotashCorp is my fertilizer stock of choice due to its diversity into the top three crop nutrients of potash, nitrogen and potassium. Further, I like the fact that it's 93% complete with its capital program. That tells me that the company's income should start seeing a boost as its expansion capacity comes online. Further, free cash flow should increase as the company's won't be spending as much money on capital projects. That suggests to me that the company's surging dividend still has plenty of growth left. 

With that being said, Mosaic or Agrium also have compelling futures, and investors could also use this simple strategy to boost the yields of both stocks too.

For example, suppose an investor wanted to profit not only from fertilizers, but from the long-term trends in agricultural retail. In that case, Agrium would be the investment of choice. A similar put writing trade on Agrium would see an investor write an October 2014 $90 put for around $2.60 per share. That trade could enable an investor to earn an addition 3% yield on Agrium's stock, which would nearly double the income earned on the stock in the first year all while buying the stock at a discount to today's price.

Growing Money

Photo credit: Flickr/Aaron Patterson

Likewise, an investor interested in a juicy income trade on Mosaic's leadership in phosphate could write September $47.50 puts for around $180. In that trade an investor could earn 3% in income on that one trade alone, which is far more than just collecting Mosaic's current 2.1% dividend yield.

Investor takeaway
Fertilizer stocks like PotashCorp, Mosaic and Agrium provide investors with a solid dividend yield. However, the simple strategy of writing puts can really boost that yield and potentially net an investor an even better buy price. That's why I've chosen to use that strategy to add PotashCorp to my IRA, which could boost my yield in the first year by 50%.

Matt DiLallo has the following options: short September 2014 $35 puts on PotashCorp. The Motley Fool owns shares of PotashCorp. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.