Option sellers who focus on income generation often gravitate toward dividend-paying stocks for good reason. Companies with long track records of dividend increases tend to exhibit financial stability, consistent earnings, and shareholder-friendly management practices. These characteristics make them excellent candidates for covered call and cash-secured put strategies.
Not all dividend stocks carry the same pedigree, however. The investment community has established distinct categories that recognize companies based on their consecutive years of dividend increases. Understanding these categories helps option sellers identify the highest-quality underlying stocks for their income strategies.
MyATMM now includes a powerful filtering feature that lets you narrow down your stock searches to only those companies that fall into one of four prestigious dividend categories. This feature appears across multiple screens in the application, making it easy to focus exclusively on quality dividend payers regardless of which search tool you prefer.
Before exploring the filter feature, it helps to understand what each dividend category represents. These classifications aren't arbitrary; they reflect decades of corporate commitment to returning capital to shareholders through growing dividend payments.
The Dividend Kings represent the most elite group of dividend-paying companies. To earn this designation, a company must have increased its dividend every single year for at least 50 consecutive years. Think about what that means: these companies raised their dividends through the dot-com crash, the 2008 financial crisis, the COVID pandemic, and every economic challenge in between.
Examples of Dividend Kings include household names like Coca-Cola, Procter & Gamble, Johnson & Johnson, and 3M. These companies have demonstrated remarkable consistency across multiple economic cycles and management teams. For option sellers, Dividend Kings offer the highest level of confidence in the underlying stock's stability.
The Dividend Aristocrats must meet two criteria: 25 or more consecutive years of dividend increases AND membership in the S&P 500 index. This second requirement ensures the companies meet minimum market capitalization and liquidity standards. Many traders consider Aristocrats the sweet spot between historical performance and tradeable liquidity.
Companies like McDonald's, PepsiCo, Walmart, and Chevron carry the Aristocrat designation. These stocks typically offer excellent options liquidity with tight bid-ask spreads, making them particularly well-suited for frequent option selling strategies.
Dividend Champions share the same 25-year consecutive increase requirement as Aristocrats but don't need S&P 500 membership. This broader definition captures smaller and mid-cap companies that have demonstrated the same dividend commitment as their larger counterparts.
The Champions list includes companies that may eventually graduate to Aristocrat status once they achieve sufficient market capitalization for S&P 500 inclusion. For option sellers, Champions offer potential opportunities in less-followed names that might provide better premium relative to their quality.
Dividend Contenders represent companies on their way up the dividend hierarchy. With 10 to 24 consecutive years of increases, these companies have proven their commitment to dividend growth but haven't yet reached the 25-year threshold required for Champion or Aristocrat status.
Contenders often include growth-oriented companies that initiated dividends more recently or companies recovering from past dividend cuts that have rebuilt their track records. These stocks may offer higher yields or better premium because the market hasn't yet fully recognized their dividend growth consistency.
| Category | Consecutive Years | Additional Requirements |
|---|---|---|
| Dividend Kings | 50+ years | None |
| Dividend Aristocrats | 25+ years | S&P 500 membership |
| Dividend Champions | 25+ years | None (any market cap) |
| Dividend Contenders | 10-24 years | None |
The dividend category filter appears across multiple search screens in MyATMM, giving you consistent access to this powerful filtering capability regardless of which screen you prefer for your research.
On the primary covered call and cash-secured put screening page, you'll find a toggle that filters the stock list down to only dividend category stocks. Without the filter active, this screen might show 700 or more stocks depending on your other filter settings. Activating the dividend filter immediately narrows that list to approximately 90-100 stocks that belong to one of the four dividend categories.
When you toggle the filter on, a new "Category" column appears in the results grid. This column displays which category each stock belongs to: King, Aristocrat, Champion, or Contender. The column disappears when you toggle the filter off, keeping the interface clean when you're not focused on dividend stocks.
The option search screen provides detailed analysis of specific option contracts. The same dividend category toggle appears here, allowing you to filter your option searches to only show contracts on dividend category stocks. This proves particularly useful when you want to find the best premium opportunities exclusively among quality dividend payers.
The trends search page helps identify stocks with momentum or specific technical characteristics. The dividend category filter works identically here, letting you combine trend-based searches with dividend quality filtering. Find stocks showing positive momentum that also happen to be Dividend Aristocrats, for example.
Step 1: Navigate to the Covered Call, Option Search, or Trends Search screen
Step 2: Locate the dividend category toggle (labeled "Kings/Aristocrats/Champions/Contenders")
Step 3: Click the toggle to activate filtering
Step 4: Notice the new Category column appearing in results
Step 5: Observe the reduced stock count showing only dividend category stocks
Combining dividend investing with option selling creates a powerful income generation approach. Understanding why dividend stocks work particularly well for covered calls and cash-secured puts helps explain the value of this new filtering feature.
Companies that maintain decades of consecutive dividend increases typically possess strong balance sheets, consistent cash flow, and conservative financial management. These characteristics translate to lower volatility and more predictable price movements. For option sellers, this stability reduces the likelihood of dramatic moves that could result in unfavorable assignments or significant losses.
When you own shares for covered call writing, you collect both option premium and dividend payments. This dual income stream compounds your returns. A stock paying 3% annual dividend yield plus 15% annual covered call premium generates substantially more income than a non-dividend stock with the same premium potential.
Understanding when dividend stocks go ex-dividend allows for strategic option positioning. Selling calls just after ex-dividend dates captures maximum time value while avoiding early assignment risk from traders seeking to capture the dividend. The dividend category filter helps you quickly identify which quality stocks have upcoming ex-dividend dates worth targeting.
Selling options on stocks you're comfortable owning long-term represents a fundamental principle of income-focused option strategies. Dividend category stocks, with their proven track records of shareholder returns, represent exactly the type of companies most traders feel comfortable holding through market volatility. Getting assigned on a Dividend Aristocrat feels very different from getting assigned on a speculative growth stock.
The dividend category filter enables several specific trading approaches that weren't as easy to implement before this feature existed.
Many traders run the wheel strategy (selling puts until assigned, then selling calls until called away) across multiple underlying stocks. Using the dividend filter lets you build a wheel portfolio consisting entirely of dividend category stocks. This approach ensures that every position in your portfolio, whether shares or short puts, represents a quality dividend payer you'd be comfortable owning long-term.
Start by filtering to dividend category stocks, then sort by premium percentage to find the best current opportunities. As you establish positions across multiple Aristocrats and Kings, you build a diversified income portfolio with proven underlying quality.
Some dividend category stocks offer higher dividend yields than others. Combining the dividend filter with yield data helps identify stocks that offer both quality track records and substantial dividend income. Selling puts on high-yield Dividend Champions, for example, positions you to potentially acquire shares that pay meaningful dividends while also collecting option premium.
Each dividend category serves different trading objectives. Dividend Kings offer maximum stability but may have lower option premiums due to reduced volatility. Contenders might offer better premiums because the market hasn't fully recognized their emerging dividend quality. Using the category column, you can compare opportunities across categories and align your trades with your specific goals.
The filter also serves educational purposes. New option traders can use the dividend category filter to study how quality dividend stocks behave during market volatility. Comparing price movements of Dividend Kings during market selloffs versus non-dividend stocks illustrates why quality underlying selection matters for option selling success.
MyATMM's Library section provides comprehensive information about each dividend category. Before using the filter to find trading opportunities, consider reviewing these resources to deepen your understanding of dividend investing principles.
The Library includes dedicated pages for Dividend Kings, Dividend Aristocrats, Dividend Champions, and Dividend Contenders. Each page explains the category criteria, lists current members, and discusses why these stocks matter for income-focused investors.
Combining Library research with the new filtering feature creates a complete workflow: learn about dividend categories in the Library, then apply that knowledge using the filter to find specific trading opportunities.
The new dividend category filter represents a significant enhancement for option sellers who prioritize quality underlying selection. Rather than manually researching which stocks qualify as Dividend Kings, Aristocrats, Champions, or Contenders, you can now filter your searches with a single toggle.
This feature appears consistently across the Covered Call screen, Option Search screen, and Trends Search screen. Wherever you prefer to conduct your research, the dividend filter works the same way: toggle it on, see the category column appear, and watch your results narrow to only the highest-quality dividend payers.
For traders who believe that option selling success depends partly on underlying selection, this filter removes a significant friction point. No more cross-referencing external lists or wondering whether a stock qualifies for a particular category. The information appears directly in your search results, integrated into your existing workflow.
Quality dividend stocks have proven their worth through decades of consistent dividend increases. Now you can find covered call and cash-secured put opportunities exclusively among these proven performers, building income strategies on the foundation of financially stable, shareholder-friendly companies that have demonstrated their commitment to returning capital to investors year after year.
Options trading involves significant risk and is not suitable for all investors. Past dividend performance does not guarantee future dividend payments. Companies may reduce or eliminate dividends at any time regardless of historical track record. The dividend category classifications are for informational purposes and should not be considered investment recommendations.
This content is for educational purposes only and should not be considered financial advice. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.
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