We’ve been tracking SCG and looking for the right entry point. With US bond yields running into resistance, we now feel money flow will continue to build in SCG, creating support and eventual price extension from the current $4.20 price point.
5.5% forward yield with 3% underlying EPS growth into FY17, makes SCG worth looking at, especially following our recent algo engine buy signal.
You're not a member! Trial today
As the share price moves higher, at around $4.40, we look to sell the $4.50 covered calls with an April expiry. The April expiration date will allow us to collect the upcoming February dividend, as well. This strategy will boost the 6 month cash flow to over 5%, or 10%+ on an annualised basis. Plus allowing for capital growth of 7%.
