Adding Cheerios to make your portfolio healthier

• Posted by Greg Harmon
• on August 19th, 2015

By now everyone has heard about the benefits of reduced cholesterol from eating Cheerios. My 86 year old father eats about a half a box for breakfast everyday, but ‘he does not eat lunch’. That is because he is still eating breakfast at lunchtime.

On the other end my kids love them too. Their preference is the Honey Nut variety, but only because that is as far down the line my wife will let it go. If they had their way it would be Chocolate Cheerios or Frosted Cheerios.

But what does any of this have to do with making your portfolio better? General Mills ($GIS) is the maker of Cheerios. And there are a lot of great reasons to add some of their stock to your portfolio. Lets start with the chart below.

This stock has had a great track record of moving higher. Over the past 2 1/2 years it has moved higher in a rising channel. This is reason enough. Recently it broke above the channel. It moved higher and then pulled back. The pullback found support at that channel for a while but has dropped today, finding support at the prior resistance. What was resistance is now support.

In addition the stock pays a healthy dividend. With a 3% dividend yield as a kicker on top of the trend it is harder to lose. If you are worried about a pullback you can cover that with options. The September 57.5 Puts cost 60 cents near the close Tuesday. They will give you protection on the downside through the next earnings report which is expected September 16th. And you will get about 44 cents of that back in the next dividend in early October. A great deal huh?

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