Big Dividend Captures With Microsoft, Walgreens, Lilly, Target and Duke

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DUK data by YCharts

Duke Energy(DUK)

Duke is an integrated energy and energy services provider in electricity and natural gas throughout the U.S. and abroad. The company was founded in 1916 and is headquartered in Charlotte, N.C.

Yield: 4.63%
Dividend Amount: 77 cents
Ex-Dividend Date: Aug. 15
Beta: 0.34

Strategy: Buy Duke the August $65.00 strike call for 10 cents over the intrinsic value.

The time premium is very small and will cost less than five cents to hold the option until option expiration day. Stocks tend to rise in front of a big dividend payment. Since the time premium is so small as a result of the upcoming dividend it's possible to receive nearly all the increase while holding risk to less than $6 a share.

My profit target is 50 cents, which means Duke will need to increase about 65 to 70 cents a share. Based on the chart pattern, it appears Duke offers a very good risk-to-reward ratio. TheStreet's Jim Cramer writes about working with entry areas Entry Points Galore (You need a Real Money Pro account to read, but Cramer's analysis alone makes it worthwhile.)

DUK Payout Ratio TTM data by YCharts
TGT data by YCharts