I also wanted a stock that would pay me a monthly dividend. Given that I'll have 100 shares, this will add up pretty quickly and assist in providing badly needed cash flow for reinvestment. Monthly dividends aren't super common however so that narrowed my options for stocks even further.
Finally, I wanted a stock that would pay out a decently high yield and for whom I knew the reason it was priced below $10/share. Given the dramatic crash in the prices of oil stocks, I feel comfortable buying companies in this industry as the core reason for the depression in price is an over-abundance of oil in the market presently. Additionally oil producers have higher distributions, and there are a fair few monthly payers. Given the industry's highly cyclical nature, I am quite likely to see the value of anything I purchase rebound again in the next decade, assuming it doesn't go bankrupt first (always a concern).
The tricky part is finding a stock that has reasonable options trading volume and provides a decent sale price for my put options. Fortunately for me, Breitburn Energy Partners is highly enough traded that I can net a nice $15 to $50 sale (that is an immediate 3% to 10% return on a maximum of $490 of my own cash) per put option I sell with 30 to 70 days until expiration. Unfortunately, at the exact same time I discovered BBEP, the market decided that it also liked the stock and the price rocketed up from about $5.50 to nearly $6.40 by the time my cash transferred into my brokerage account. I almost gave up on the experiment as it was priced well out of my reach when the shares dipped the following day (last Friday) which increased the $5.00 put option expiring June 19 enough for me to sell. I managed to sell a put option at the strike price of $5.00 for a premium of $0.20/share (or $20). This netted me an immediate 3% return on my cash. This is astronomically higher than what I'd earn in my savings accounts. :) I am selling this put option with the intention of acquiring BBEP and locking a solid yield. However, if the option ends up expiring without exercise due to rapid price growth (which seems entirely likely), I might have to simply pocket the premium and pick a different stock to try the strategy out upon.
If the option is exercised and I end up purchasing 100 shares at $4.90 each, I'll lock in a steady dividend, which is currently at $0.04/month. As oil prices fluctuate this will increase or decrease accordingly, which is fine with me. Any money I make without having to work for it is great news! Last year BBEP was paying out $0.17/month. If oil prices ever recover, that would provide me with a yield in excess of 30% annually on these shares. That would be FANTASTIC!! :) I doubt that will happen anytime in the next few years. But a fellow can always dream, right? In any case, stay posted for the results on this experiment. :) Presently I've set up a transaction to close me out of the position which would net me $15 profit (before tax of course) and free my cash to use for other put options, however I find it unlikely that I'll be able to close out of this position easily, in which case I'll simply end up holding the contract until expiration and selling a new contract if the price is around $6/share still.