Wednesday, August 04, 2010

How to Get a 6% Yield from Chesapeake Energy

If you like the natural gas and oil sector, and you like the prospects of Chesapeake Energy Corp. (CHK), especially with its forward PE ratio of 8 and 1.02 PEG ratio, but you are still concerned about the stock market, why not consider some of the Chesapeake Energy convertible preferred stocks? Especially since Chesapeake only yields 1.4%.

A preferred stock is a stock that pays income, similar to a bond, but with no maturity date, although it may be callable. There is no growth potential with a preferred stock. But if the company goes out of business, the preferred stock is paid off before the common stock. However, a convertible preferred stock is a preferred stock which can be converted into shares of the company's common stock, thereby providing capital appreciation potential.

Here are three Chesapeake convertible preferreds worth taking a closer look at. Please note: depending on what site you are using, the stock ticker symbol may be different from place to place, so I have included a couple different stock symbols for each. Before investing, please check with your brokerage firm to make sure that the one you are interested in matches that data for the one you are planning on buying. The following are trading way below their conversion but you can receive a decent income in the meantime.

Chesapeake Energy Convertible Preferred Series D (CHK-PD) (CHK-D) 4.5% Cumulative Convertible Preferred Stock paying $4.50 annually and yielding 5.49%. It goes ex-dividend August 30.

Chesapeake Energy Convertible Preferred Series G (CHKDG.PK) (CHKDG) Cumulative Convertible Preferred Bond paying $5.00 annually and yielding 6.21%. The stock just went ex-dividend July 29.

If you like high yield investments, check out highest quarterly dividend stocks and highest monthly dividend stocks at And if you want to get a 5% yield from Goldman Sachs (GS), take a look at this article.

Author does not own any of the above.


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