Episode #9 v1.1
Welcome to the ninth episode of the Tax Free Millionaires podcast. I'm your host, Reed Scott, and in today's episode, I'll be covering a completely different type of investing strategy than I've discussed in any of my previous episodes. Today, I'm going to discuss a dividend stock strategy, and specifically, I'm going to cover how to triple your income with dividend stocks.
And as always, at the end of the program, I'm going to highlight my stock pick of the week, and But this week in keeping with the theme of the episode, I'm going to highlight what I believe is a great dividend stock. So make sure to stick around till the end.
Okay. So this is the second episode of 2025 and I hope everybody had a great holiday and we're getting back into the groove for the new year. And what I'm going to talk about today may be for a limited audience. It's going to be for people who have already. Established an amount of wealth. You may be getting ready for retirement.
You have a significant amount of money in your IRA retirement account, 401k, maybe 500, 000 or more. So a lot of what Tax Free Millionaires does is help any investor, whether you're starting out or more experienced to master your own investments and re receive double digit annual. Returns on your portfolio.
And in light of that, I've created a series of courses at tax free millionaires. com that teaches how to select the right stocks, how to trade covered calls, how to use options, how to create a tax free investment alternative to the stock market. I'm working on a new course and I'm going to introduce that today.
It's probably not going to be completed and available for purchase until the second quarter of 2025, but I call it tripling your income with dividend stocks. So for those people who are, who have money in their portfolio already and want to learn how to create a good income from that money in retirement, or maybe you're going to retire early.
This episode is for you, for those of you who are starting out and want to learn how to just make your portfolio bigger, then I would refer you to my previous episodes or go to my website, tax free millionaires. com and we have a variety of courses for people who want to learn how to invest and manage their own portfolio and get consistent returns as high as 30, 40, or 50%.
So this. Episode, as I said, however, is for people who want to get a consistent, predictable income. And that's why we're talking about dividend stocks. So you're not so much focused on increasing your portfolio as you are protecting it and making sure you have enough money to live on. So it's interesting when I see a lot of advertisements in financial newspapers, and I listen to people on the financial news shows, Whatever channel you listen to, I often see people talking about, especially financial advisors, talking about this 4 percent rule that you should plan on taking 4 percent of your money out of your retirement accounts to live on in retirement.
And when I hear that, I just cringe. I can't believe that. This is some advice that people are paying for and paying one to one and a half or 2 percent for this type of advice. The reality of it is with good dividend stocks, without even doing anything else, you should be able to get 6 percent on these stocks without touching your principal at all.
Now, what I'm going to talk about today is how to increase that income. And I'm not talking about 5 or 6%. I'm talking about tripling that to maybe 15 to 20%. Now, can I guarantee you that? No, but I have a way that you can work on that and improve your investing in dividend stocks and increase your income over time without any risk to you.
So one of the things we do in the course that I'm offering is I'm going to help you develop a simulated portfolio so you can practice the dividend income income strategy and get really comfortable with it before you do it in your own portfolio. And that's the key to all the Tax Free Millionaire courses.
We set up a simulated environment. We'll let you practice over and over again. We show you every technique and you can see for yourself what works best, what doesn't, and you can tweak it before you start going live in your portfolio. Now for the tripling your income in dividend stock strategy, I suggest the same thing.
The course is going to show you, first of all, how to set up a simulated environment, schedule and structure model portfolios, maybe more than one. Or you can practice the techniques I'm going to talk about today to increase the income off your dividend stocks. So first of all, how can you get more than just the dividend income on your stocks?
What are some of the risks and what are the things you need to be aware of? There are places that you can go quite easily and get a screen of all the dividend stocks out there. See how long they've been paying dividends. And get information on their financial status. Now, the first thing you want to be able to do is screen dividend stocks.
So one of the areas we teach you on our course is where to, how to screen dividend stocks, and you can screen stocks that are paying 5%. You can pick screen for stocks that are paying over 8%. And obviously the higher you get on the dividend, the more careful you have to be. And you have to. Look out for a number of things.
So that's why we also teach in the course, how to do some fundamental analysis, how to read a financial report and make sure that the companies you're investing in are not heavily in debt. You want to avoid that. And there's a trade off between a high dividend and a risky stock. You don't want to just go out and get the highest paying dividend stocks because you first have to look at.
Is this company a good company? Is it going to be around? How long have they been paying this dividend? What's the price range of that stock? Is it going to drop and I'm going to lose my capital? So first of all, when you're using your retirement funds to create income, you want to protect your capital.
And by the way, what I'm going to talk about today and in our course, I'm focusing on trading and creating income from dividend stocks in a tax deferred retirement program, whether that's a 401k or self deducted IRA or a Roth account. So it's assuming that you're doing this in a tax deferred account.
Why is that important? Because one of the ways we protect your portfolio, your principal. Is to make sure you setting stop losses on this dividend stocks you buy. So if it drops for some reason, precipitously, you're going to automatically be out of that stock and protect your capital. Now, the problem with that is.
You have to be in the stock long enough to be paid the dividends. In other words, you have to buy the stock before it pays out its dividend so that you can get the dividend, right? If you end up automatically being sold out of the stock, but you won't receive the dividend. However, that may not be a horrible thing, especially if you want to protect your principles.
So if the stock drops 20%, And you have to hang on to it for three more days to get the dividend. It's not worth hanging around. You want to be out of it to protect your principal. And we show you how to do that automatically. So one of the things obviously is you want to make sure you have good fundamentally sound stocks, low debt ratios.
We show you how to find that out in our course. We show you how to screen the stocks to choose in the first place, and we show you how to go out and make sure those are good companies. We also show you where to find out how long they've been paying that dividend, and what's the, the price range of that stock.
You want, you don't want a stock that's paying a dividend that fluctuates great, you know, in a 52 week period, you're trying to get income off of it, not capital appreciation. However, here's the good news, you can also get capital appreciation. So what are the three sources of income you get from a dividend stock?
Well, number one, the dividend itself, the dividend yield. So we're going to look at that. We're going to look at how long it's been paying that yield. We're going to look at the financial structure of the company to make sure it's financially sound and has a low debt ratio. We're going to look at the company from four factors.
So we do this when we're investing in companies for capital appreciation. But we also want to do it when we're investing in companies for dividends, because we want to know that the company is fundamentally sound. Actually four factors is what we're looking at, and those are the kind of four fundamental factors.
We're looking for the moat. What is the protection a company has in its business from competitors? How long is that going to last? The other is the market. Is the market sustainable? I mean, is this a market that's going to go away? Are you investing in horse and buggies when automobiles are coming into existence?
Even though they might pay high dividend, the stock may not be around that much longer. So, the market, the moat in that market, the management, management is very important. We, we want a management that's proven, has a good track record, has expertise in that industry and, and hopefully a track record with that company.
So that's the three M's, market, moat, management. What's the fourth? Well, money. And money really covers all the financials. You know, are they profitable? Are they, do they have a low debt ratio? So those are the four Ms that we teach you how to analyze, where to go to get that information and how to use it to pick your companies after you've screened for the initial dividend paying companies in the first place.
We also show you where to go and find out how long they've been paying a dividend. Do they have a consistent dividend history? And all the companies that we're going to put in a dividend strategy are going to have to have been paying dividends for at least five years without missing a quarter. And that's a minimum for my approach to this.
And you wouldn't believe how many companies there are that have done that. So there are quite a few. One of the other things we're going to be looking at, after you set up that simulated portfolio and you've screened your stocks, we have to find the right kind of dividend stocks. And that's what we go through in, in, in analyzing this.
Now, we obviously know, we talked about the four Ms, the market, the moat, the management and the money, but what else do we need to make sure we have in terms of a dividend stock? Well, you have to look at how we're creating income. So the first income is created from the dividend itself. And that might be five, six, 7%.
Or more, but what else, what other ways can we create dividend? So the other way is selling cover calls. So that's what we teach you in our course, how to sell cover calls. So you want to, if you're going to sell cover calls and people get, I know they get nervous when they hear about options and they think, Oh my, that's a risky gamble, but actually selling cover calls can be very conservative strategy.
If you know how to protect yourself when you're doing it. Now, when you sell a covered call, you aren't taking an uncovered bet. You are only selling a covered call. On a stock that you already own. So you're not going naked as they say, this is not a naked option trade where you're fully exposed. If you aren't familiar with options or cover calls, I'll give you a brief example of what I mean.
Let's say you own a thousand shares of Pfizer, which happens to right now pay a dividend yield of about 5. 6%. And they've been paying that for, I think, eight years consistently. So Pfizer is a drug company and the price range of the stock is pretty consistent. And you've determined that you want to put that in your dividend portfolio.
How could you create more money on Pfizer other than just the 5. 6 percent dividend? Well, Pfizer, you, and we teach you this in the course, where to go to find out this information. You want to look at how often the stock is traded. So in other words, is there a lot of trading volume on that stock, Pfizer, and you need trading volume to be able to sell cover calls because If you, if the call goes against you, you want to be able to get out of it very quickly and actually we show you how to do that automatically.
We show you how to set up and protect your stock. Let's say you own a thousand shares of Pfizer and you paid for 25 a share when you're going to sell a cover call on it. And what if it drops to 23 and you have a stop loss on that and you will say, if it drops to 23, I went out. If it. Stays above 23, I'm going to stay in and collect a dividend.
Now, can you sell a covered call that you have a stop loss on? And the answer is yes, but it's what's called a conditional order. So we show you how to structure that and set it up in our course. So you can put a conditional order in on your thousand shares of Pfizer that says, if it drops to 23, it will automatically close out my covered call position and sell the stock.
So it protects your capital. Now, what if it doesn't drop? What if it stays at 23 or goes higher? Then you're going to keep the premium from selling that covered call. You're going to pocket that and you're still going to own the stock. So that's the second way you get income from selling premiums on the stock.
What's the third way you make money? So let's say that Pfizer, you bought it at 25 and instead of dropping to 23, it goes to 28. Then it's going to get called away and you're going to have to sell it at 27. Now we're showing you in a course how you don't have to do that. We can show you how to unwind that trade, keep the stock and some of the premium.
But let's say you don't, let's say you don't want to do that. Let's say that you're fine with getting a call away at 28. You've sold a cover call 27 and actually 2 per share plus the premium because you have to sell it at the strike price of the cover call you sold. So the person who bought the cover call from you.
Made a dollar because the cover calls at 27 minus the, the cost of the premium that they paid you, and then they are able to buy it at 27 and sell it at 28. So they made a little money, but you made a couple of dollars because you bought it at 25. You're selling it at 27 and actually you made more than a couple of dollars.
You have made the premium plus a couple of dollars. So let's say you made 50 cents a share. That's 250 a share times your thousand. So you've made not only the dividend, if you were able to keep it past the dividend payment date, if you weren't, you're okay, because you made a cover call premium and you made the capital appreciation on stock.
Now, why is it so important that we do this in a tax deferred, Because there's no tax consequence in terms of paying a capital gains tax when that stock gets called away. You've made that income, that profit. And you don't have to pay any capital gains tax on it because it's in a retirement account. Now you could buy, you could wait and buy, maybe Pfizer drops back down to 23 or 25 and you buy it again and do it all over.
But reality of it is most of the time, if we, we show you where to sell the cover calls, where to get in so that it's not going to get called away so that the probability is, and we show you how to measure probability. So that most of the time you'll be able to keep the stock and the premium without getting it called away.
Sometimes it will get called away. And the question will be then, do you want to buy back your covered call and lose some of that premium and keep the stock? We show you how to do that. That's all up to you. We even show you how to set it automatically. So there are three ways, basically just to summarize, there are three ways to make money and income from dividend stocks.
You're going to do it by the dividend itself. We're going to show you how to select the companies that pay consistent, reliable, repeatable dividends on companies that are fundamentally financially sound. We're going to show you how to create covered call income and premiums on the stocks that you own.
The, what is the risk? So people get nervous about options. Well, we're not talking about naked options and you do have to worry about that. When you're talking about covered calls, we're talking about a very safe way to use options. What's the worst that could happen? And Well, if you have stop losses on it so you can get out, the worst could happen is let's say your Pfizer stock goes to 40 a share and you sold a cover call at 27.
Well, you've missed all that upside potential, haven't you? But remember, you weren't really in this for capital appreciation. You were in it for the income and you've made a good income on that thousand shares because you made, you bought it at 25, you sold it at 27, you made the premium. So yes, you had some opportunity costs, but not real costs.
So, and again, If you see the option going up and taking off, we can show you how to get out of that if you really want to keep those shares. So there are a number of ways around that. People sometimes don't sell covered calls because they don't realize they can unwind those trades very easily or do it automatically.
So you don't even have to get close to getting called away. Now it limits your income a little bit, but it helps you keep the stock. So there's just a number of ways to structure this. And we show you how to do that. First of all, find the right dividend stocks. Then you want to find the right dividend stocks that you can trade options on, because not all dividend stocks that pay high dividend are going to be good stocks for selling covered calls on, because there isn't enough volume for you to be able to sell covered calls.
You have to have enough volume in the marketplace for you to be able to get in and out of trades quickly. And we need volume. So you, you first have to do the screen on the stocks, do the financial analysis, and then we show you how to choose the right stocks that have enough volume for you to sell covered calls on them.
Then we wanna show you how to set up your portfolio and manage that portfolio to have risk management, to make sure you don't lose capital. Now, you may lose a little bit of capital in some of these trades. We're going to have a very low exposure. We're not going to have a risk tolerance because number one, we wanna protect your capital.
Number two, we want to create income. Number three, we want to get as high as possible, and we wanna be to do over able to do that over and over again. So we're going to show you how to select the right stocks that pay dividends, consistent dividends with good fundamental financial analysis on the stocks.
We are then going to show you how to find the right stocks that have met all the first criteria on financial analysis. Now, are they good? Stocks to sell covered calls on, which is the second tier of income. And then part of that is also, are these stocks going to have a opportunity for capital appreciation?
So capital appreciation is not the biggest component of this, but you will have some capital appreciation if you pick the right dividend companies.
There are fundamental keys and there are technical keys. So the other thing that we teach you in the course is technical analysis, timing. When do you get into that cover call trade? There are better times to do it and worse times. Sometimes you may not want to get in because you don't have enough time according to the technical analysis we're going to show you.
So we do some very clear, uh, you know, we're not going to overwhelm you with simple moving averages in 200 days versus 50 days. We have charts that show you. You know, exactly when to get in, when to get out. Now they're not always perfect. Nothing ever is when it comes to timing. They're trends, but by using the technical analysis tools that we teach in a course, we can show you the better times to get in and out of stocks or when to sell a cover call and when not to.
So we'll get into some moving averages. We'll get into Fibonacci curves, which help you determine floors and ceilings. In other words, when do you want to, where would you set your stop loss at? Where would you get out of a trade? Okay. So we want to show you how to enter trays and how to exit them properly, how to set limits.
We also, on the stocks that you do have significant capital appreciation on, now we're going to show you a different way to protect yourself. So let's say you bought Pfizer at 23, you're selling covered calls on it, and over a year it, you kept doing that, you kept it, you made a little bit of money, but it gradually kept going up till now, after 12 months, it's gone from 23 where you bought it to 40 or 35.
So you've got a significant amount of capital appreciation in that stock. You can now afford to protect yourself with a puts. So, we show you how to use protected puts instead of stop losses. Why is that better? Because a protected put gives you more flexibility. You want to remember, you want to keep that stock so that you don't have to sell it to preserve capital and you want to be able to keep it till it pays the dividend.
So, you want to keep it through the quarterly dividend, uh, date. Uh, after that, if you own it, After that date, you'll get the dividend. If you sell before that date, the ex dividend date, you won't receive the dividend. So we want to be able to pick up that dividend. We also want to protect ourselves, however.
So now typically if we're picking good dividend stocks, there won't be a lot of fluctuation in their price value, but there always is. That's the nature of the more stock market. The stock market can have a correction, It can have a crash unrelated to anything in that particular stock. You could have a war, COVID as we all know.
You could have the crash of 2008 with real estate impacting the stock market. So there are any number of factors where you have to protect yourself. However, with puts, you have more protection than you would with a stop loss. So give me an example of that. Let's say that you bought Pfizer at 23 and now it's up to 35 after 12 months and you have a significant amount of profit in there.
So now you can afford to purchase a put. And a put is a option that says, okay, I'm going to buy the right to sell my Pfizer shares to someone at 35. And that way, if the stock drops below 35 and you're selling cover calls, you don't have to do a stop loss to get out of it. You can keep the stock and see, and you can let it, your expiration date on your put is going to be further out than your cover call time.
So that allows you to see if the stock's going to come back up. So let's say you sold a car, call 35. And you've got a put at 35, but the stock price of Pfizer goes to 30, 33. Well, if you had a stop loss on that, you might automatically be sold out of it. But the put doesn't expire for, let's say two weeks past when your cover calls are going to expire.
That allows you that two weeks to see if the stock price is going to come back up over 35. You don't have to sell the stock right away. Now, if it doesn't come back to where you want it, you can exercise your put and dump it on someone at 35. But let's say it goes up to 36, where your put's going to expire worthless.
You're going to keep the stock and you're going to get the premium from the covered call. So you protected yourself from the downside with that protected put and it gave you more flexibility. Now stop loss, once it hits that price, the market automatically sells it out. But with the put, you have to exercise it to sell it out.
So you have more control over hanging on to the shares. So one of the things we show you is as we go through more time and you accumulate profit in your dividend stocks, you can stop. Going from stop losses as protection to puts per protection. Now puts cost a little bit. They cost something. Stop losses don't cost you anything other than that lack of flexibility.
Puts cost more, but depending on how much profit you've got into stocks, you may want to pay that little bit more to get that extra protection. It's a great way, once you've got your portfolio rolling, to keep your stocks, get your dividends, and keep your capital appreciation. So that's one of the lessons we teach you.
We also teach you how to look at market timing. So there are four stages to the market. There are going to be times when you should not be selling covered calls because the markets is oversold. And perhaps it's a prime for a correction. So maybe you don't want to put covered calls on there that you have to unwind.
So. We can't predict those perfectly, but we talk about the market cycles, some tools to recognize when the market's oversold, when stocks are oversold, when a particular industries are oversold so that you can have some idea. And we also use that market cycle lesson to teach you how to use puts on your entire portfolio to protect you from a down turn in a market.
Now we're also going to teach you option mechanics. So we don't just teach you cover calls. We're going to also going to teach you about puts and how to use them, protect your portfolio. We even talk about. A little bit. We're not going to go into advanced options in the dividend course, because we were assuming you're not going to do any option speculation, but when you have a good dividend stock, that's been a good stock for you might want to do what's called a stock replacement strategy, which means you take a small portion of your portfolio and put it directly into options on that stock.
Not a lot, never put more into standalone options than you can afford to lose, but maybe it's three to 4 percent of your portfolio. And you've had this Pfizer stock that's been doing great for you and you see what the price range movement is. You're very comfortable with it. You might buy a call option on that particular stock that says, okay, I'm going to buy this option at 30 and if it goes up to 35, I'm going to make money on it and if it doesn't, I'm out the premium.
So this is the danger of the standalone option that you could, if you lose the premium, you've lost your entire investment. That's why we teach you never to invest more in standalone options and you'll go forward to lose. Now, again, standalone options are not like covered calls. With covered calls, your, your downside risk is you don't make as much money as you would if you just own the stock outright.
With standalone options, you can lose your entire investment. So never invest more in standalone option trades than you can afford to lose. And we, we hammer that through our entire courses about options trading. So we talk about protected puts, collars, how to protect your stocks around earnings periods, market cycles.
And the other thing we teach in that course is in all my courses, I teach people that you should not have all of your nest egg entirely in the stock market, or at least without some protections. And we teach risk strategy. Uh, when you're investing in equities, we teach risk strategy. So the important thing to remember is.
A lot of the financial industry talks about passive investment and that's a big play. Now people are saying you can't beat the market. And when I was in graduate school studying portfolio management, there was a famous book called A Random Walk Down Wall Street by Machiel. And he said, he gave a data that said you couldn't beat the market no matter what you did.
So you might as well invest in indexes and now popular investment tool is ETFs. Well, I personally believe that's baloney. I've proven that it's baloney for my own clients and my own investing. You can beat the market and you have to use active, uh, trading to do that. And one of the things when you're investing in your retirement account, you can really do it because the advantage of investing in stocks and individual equities in your retirement account is you can get out of them without any capital gains.
So you don't have to have this buy and hold strategy. In your taxable portfolio, you want to have a more buy and hold approach because you can't afford to buy and sell every day and pay those taxes and you may end up eating your profit up doing that. But in your tax deferred retirement accounts or your tax free Roth accounts, if you have those, but tax deferred works perfectly well as well.
You don't have any capital gains to worry about. So if I sell a Pfizer stock and make 2 a share, I'm not paying taxes on that until I take money out of the account, right? Why have all of your eggs in this basket where I have to take money out and, and eventually pay tax. So you could do a Roth conversion for some of it, and that's possible.
But what if you could divert some of that money that's taxable? into tax free forever, where you don't have any required minimums, where you can access the money tax free, and even when you can borrow against the money, tax free. So that's something you can't even do with a Roth account. So we teach you an alternative investment strategy that protects you from market downside risk.
Allows you to borrow on your assets at a lower rate of interest from what you're earning so you can create arbitrage. So that's a bonus in all of our courses, but especially the dividend course, because in a dividend course, we assume that you're looking for income and as opposed to capital appreciation.
So we're reducing risk. We're showing you additional ways to create income on your dividend portfolio within your retirement account. And by the way, you don't have to put all of your retirement account in a dividend stocks. Try a piece of it, try a small piece to see how it works. But even better than that.
In our course, we show you how to set up a model simulated portfolio where you can do every trade just like it was in the market. You're going to get the same market prices. You're, you're, the only good news is you're not paying commissions because it's simulated. You're going to be, you could set up several model portfolios and with different dividend stocks in each one.
And we recommend in our course, which will take you, you know, a couple hours a week to take the course. And we recommend you do that in a three month time period. But even after the course is over, we recommend you do the simulated trading in your model portfolio. for at least six months before you start doing this real time in your own portfolio.
In that six months, you're going to practice hundreds of trades. You're going to become a master investor in dividend stocks and finding the right stocks and making sure you protect the portfolio and you increase your income from covered calls and you get capital appreciation. So the course is designed to be safety first.
Income, second, capital appreciation, third, number one, it's designed so you don't have to live by this. The financial industry would like you to be dependent upon them for meager average returns of six to eight percent. And then tell you you can take out four percent of your principal and that you'll need to do that to live.
And quite frankly, I believe that's bad advice. And the reason I believe they do that, this is my opinion. Is that big financial institutions have trillions of dollars under management. They can't pay attention to each individual portfolio. They can't put stop losses on or protective puts. So they recommend a passive investment approach and they preach what Maciel preached that you can't beat the ETFs in the excess.
So why bother? But really what they're doing is making it easier on themselves to get more and more money assets under management, what they call AUM. Cause that's how they get paid percentage of AUM. So they encourage you to do that as opposed to diversify out of the market into alternative investment tax free investments like I'm, I show you in the course, I believe in the market you should do both.
I believe you should invest in the market and look at things that protect you from market corrections, which is why we do an entire range. The financial industry tells you they're, they're getting you involved in indexes because it's safety, they're telling you to diversify and if you're in an ETF or index fund, you're going to be invested across many different industries.
Yeah, but it's all in the stock market. So I had clients in 2008, not financial clients, but legal clients that lost 40 percent of their portfolio because of this passive investment approach. Because these advisors don't get you out of the market when it crashes. When you lose 30 to 40 percent of your portfolio, what they do is tell you, don't worry, it'll average out in the long run.
What if you're 65 and it goes down 40%? And even if you're 40 and it goes down 40%, how long does it take you to get it back? In the good years, a long time. So this is why they tell you to be happy with six to 8 percent because that's the average of the of the indexes over time. Right now, financial advisors are patting themselves on the head or the back and beating their chest telling you, Hey, I got you 17 percent or 20 percent because the index is up, but they don't tell you about the fact that it was down 30 percent or 20 percent a few years ago on the average over your lifetime is going to be six to 8%.
You can beat those averages consistently. By actively managing your account. And that's what we teach you in these courses. Okay. So that's it for this episode of the tax free millionaires. I hope it made sense for you. So the dividend course is coming in a few months, but right now you can get primed for that by taking our cover call course, which is a very small mini course.
Get you familiar with how to sell cover calls, how to use stop losses, how to use conditional orders, and get you started practicing on that. I'd also recommend that first, but then I'd recommend the Our signature course on stocks and [00:31:00] options will get you exposed to. The fundamental tools you need to understand how to find out if the company is good and then a good long term investment teaches you options, trading, and timing.
Then when the dividend course comes, if you want to take that, you'll be primed and already familiar with a lot of these concepts, and then you can just set up your dividend portfolios and you'll be ready to go. So. Those courses are available at tax free millionaires. com. At the same time, I'd also invite you to join my free Facebook group or our, our free membership group at tax free millionaires.
com. The Facebook group is facebook. com forward slash groups forward slash tax free millionaires. And also if you sign up at the Facebook group, you'll be eligible to get a free copy of my book, tax free millionaires, where I talk about many of these techniques in the book. So with that, let's go ahead and talk about the stock pick of the week.
So. In keeping with this episode about dividend stocks, I want to give you what I consider a great dividend stock. So the stock is UPS, United Parcel Service. So that may not be a surprise for you, but here's why I like that stock. Number one, they have paid consistently and not missed a quarter of dividends for 55 years.
Incredible. A very well run company with consistent earnings, very low debt. Right now, the dividend is not that high. It's about 4. 8%, which when you consider how safe that stock is, 4. 8 percent compared to a bank CD for a year, it's pretty good. But now here's the great thing I like about this stock. They have a lot of stock volume.
That stock trades quite a bit. So it's a great stock to create covered call income because there's so many shares change hand every days. It's, it's good stock to get in and out of. And, and be protected when you sell cover calls to create that additional income. The third thing I like about the stock is I believe it has some room for capital appreciation.
Trading range over the last 52 weeks has been about 126 to 162. So it's at right now it's selling about 126 or 127. It's at the low end of its 52 range high. So you've got almost 40 of potential appreciation. And now it could go down and we show you how to protect yourself from that eventuality. But I believe, despite the fact we might have some corrections here in the next year, that that's a good, fundamentally sound stock.
So there are others out there. We're going to show you how to find out all of those at tax free millionaires. com. But I like UPS as a, as a good starter dividend stock. So with that, we're going to call it. A week and I hope you've enjoyed this episode and I hope that you'll turn in for next week's episode.
Episode 10, we'll be talking about additional ways to leverage your retirement accounts for tax free investing. I'm Reed Scott and I hope you have a great week. Take care.
