Robert Half International Inc. (RHI) Yield: 2.12%
Dividend Amount: $0.14
Ex-Dividend Date: November 21, 2011
Beta: 1.16
Robert Half International Inc. provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. Its Accountemps division offers temporary staffing in the fields of accounting, tax, and finance. The company was founded in 1948 and is based in Menlo Park, California.
There are numerous dividend capturing techniques, and I have utilized just about every method known. One of the most important aspects to success is limiting the stocks to only the very best candidates. Using call options for hedging is one of my favorite and easy to understand methods of capturing gains through options and dividends. In my dividend capturing, I will typically hold on to a position for about a month or in some cases longer. This method can be used to capture more than one option by holding for longer than three months, or more.
In this article we will go over an upcoming dividend that I may capture with a minimum amount of risk. The criteria that I use is that I must be able to sell a call option in either the front, or first back month that is in the money, and with enough premium that I will not mind getting exercised early (which happens often and can be a good thing if the trades are executed correctly).
Strategy:
In combination with my buying the stock and after checking company updates, offer to sell the December $25.00 strike call for $0.78 over the intrinsic value. The option may get exercised early for a gain. If not, after qualifying for the dividend, I will attempt to close out the trade with a gain of near $0.09.
The current trailing twelve months (ttm) P/E ratio is 29.5 The forward P/E ratio is 25.3. The current book value per share is 5.54.
The company has rising revenue year-over-year of $3.18 billion for 2010 vs. $3.04 billion for 2009. The bottom line has rising earnings year-over-year of $66.07 million for 2010 vs. $37.26 million for 2009. The company's earnings before interest and taxes are rising with an EBIT year-over-year of $114.59 million for 2010 vs. $65.32 million for 2009.
At $26.83, the price is currently below the 200 day moving average of 27.05, and above the 60 day moving average of 23.73.
In the last month, the stock has increased in price 8.49%, with a one year change of -4.24%.
When comparing to the S&P 500, the year to date difference is -13.15%.
Remember, you must buy a stock at least three business days before the record date (at least one business day before the ex-dividend date) to qualify for a dividend.
My last step (completed before making a trade on the same day) is to check company announcements, and news sources for possible events that may cause the stock price to move. This is especially important during earnings season.
I research the different call options and calculate the expected probabilities based on Beta, Bid, Offer, Volume traded the current day, open interest, and time value / implied volatility. The Options offer some level of protection from down moves in the stock, and provide revenue to cover the times that the options do not fully cover down moves in the stock. Income is not needed from the option Premiums, so a break even from premiums received/stock losses ratio is a win.
I use a proprietary blend of technical analysis, financial crowd behavior, and fundamentals in my short-term trades, and while not totally the same in longer swing trades to investments, the concepts used are similar. Nothing in the article should be considered investment advise, but you may want to use this article as a starting point of your own research with your financial planner.
