Even These Stocks Can Pay You Backhttp://www.fool.com/investing/options/2010/07/12/even-these-stocks-can-pay-you-back.aspx Dan Caplinger
July 12, 2010
Investors have gotten increasingly frustrated with companies that hoard their cash instead of putting it to better use -- like paying dividends to shareholders. But if you like a particular stock as an investment, but also need to draw income from it, there's still a way to turn you shares into a stream of income.
Hanging onto their money
Still, the amounts of cash some companies are keeping has gotten ridiculous. Apple's (Nasdaq: AAPL ) Steve Jobs may want to keep cash on hand for "bold investments," but does he really need $23 billion in cash and short-term assets to get the job done? Google (Nasdaq: GOOG ) and Cisco Systems (Nasdaq: CSCO ) have taken similar criticism, since both are highly profitable, yet don't share their tens of billions in cash with investors. And even with Warren Buffett's long-term success, some pine for Berkshire Hathaway (NYSE: BRK-B ) to start paying a dividend.
Do it yourself
The strategy is known as a covered call position. For every 100 shares of a certain stock you own, you can write one call option, which entitles whomever buys that option from you to purchase your shares at a certain price, within a particular timeframe. In exchange for that right, you get paid what's known as a premium in cold, hard cash. The premium is yours to keep, no matter what happens.
How much cash are we talking about?
To give you a general idea, though, here are some examples involving those non-dividend stocks we talked about above: