Consider Using This Annual Strategy Now, Not in January

There are plenty of market strategies that investors like to employ. And often, the start of a new year is an opportunity to make a change.

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  • However, investors don’t have to wait. Given that stocks will likely see a small pullback at the start of December then have a year-end rally, having a plan in place to profit now could lead to better returns.

    One investment strategy is the Dogs of the Dow. That’s a concept of buying the 5 highest yielding Dow stocks at the start of the year. It’s led to outperformance over time.

    But investors don’t need to wait until the new year. They can target high-yielding stocks now for a better price. One high-yielder that’s out of favor but now trending up is Verizon Communications (VZ).

    The telecom play offers one of the best yields in the S&P 500, currently paying about 7 percent. Shares are flat over the past year, but are trending up from their October lows.

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  • Action to take: Income-oriented investors may want to build a stake in Verizon in the coming weeks, for its high dividend yield and further upside potential.

    For traders, a high yield can weigh on price returns over time. But the current trend could still play out in the next few months.

    The January $39 calls, last going for about $0.50, could see high double-digit gains in the coming weeks. Traders may want to scale into the trade, adding to the position on any down days in the first half of December.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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