In Our 2024 Investment Strategy for Equities, we introduced our DIVOS™ strategy and during this week’s market turmoil, we initiated a very small position in CF (CF Industries Holdings) and intend to hold and accumulate this stock for the foreseeable future.
Here’s how we think it fits our DIVOS model.
Demographics
CF Industries Holdings, Inc. manufactures and sells hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities worldwide. Everyone on the planet needs to eat and with 8 billion people on the planet, this is one industry that should do well.
Income
CF has been paying dividends for 17 years and our goal is for at least another 10 years of dividends from this equity. CF has generated an amazing $833k net income per employee in 2023 and has a 5 year average net income per employee of $377k.
Value
As of the time of this post, CF is trading at about 26 percent over it’s 52 week low. We will very slowly accumulate shares from here and wait for corrections to buy bigger chunks of CF.
Options
CF has an options market and we look forward to selling cash secured PUTS and sell covered calls on this stock to squeeze more value and profits out of this equity. As of 4th of Oct 2023 the call option table below shows a potential yield of about 8% for a buy-write trade executed for January 2024 out-of-money trade today theoretically.
S&P 500
CF is a member of the S&P 500 and is categorized as Basic Materials and serves as a diversification point in our portfolio.
We’ll let you know as we accumulate more, we’ve already set our CF to DRIP (Dividend Re-investment Plan) so we’ll be acquiring shares automatically once we receive dividends but we’ll also buy more via cash secured puts and buy-write trades so stay tuned, stay profitable and stay solvent…