Great investing is down right boring.

It does not get more boring than investing in an old manufacturing company who isn't constantly blasted on the media as launching the greatest thing since sliced bread.

Boring companies happen to be excellent businesses that gush free cash flow. These companies use this excess cash to reward shareholders year in and year out.

These companies are also attractive because the speculative traders tend to stay away allowing prudent investor to acquire ownership at great prices. Which is exactly the type of situation I am looking for to generate income through the options market.

Put selling strategy reminder:

As a put seller, you are paid upfront for agreeing to buy shares at the stated price (called strike price) for a set amount of time (till expiration day). Put options often expire worthless leaving the put seller with the upfront cash, an attractive return and their capital back to repeat the process.

The boring company of focus today is over 100 years old.

Illinois Tool Works (ITW) is a $49 billion company is a manufacturing giant in Automotive, Food Equipment, and Test & Measurement and Electronics.

The everyday products and innovations ITW has created produces $14 billion in annual sales with excellent 17% profit margins. With $2 billion in free cash flow the company has bought back more than 25% of its outstanding shares and increased the dividend by an average of 15% over the last 5 years. ITW is a Dividend Aristocrat having raised dividends for 50 straight years.

Early investors are making a killing just collecting the dividends compared to their cost basis. However even new investors will start at a nice 2.7% yield today.

The stock has had a nice run and the recent pullback provides our opening to sell puts.

Trade details:

Sell to open the October 19, $145 puts on Illinois Tool Works for $3 using a limit order. Collect an instant 2.1% payout on purchase obligation and agree to buy shares at a slight discount to todays price.

At expiration if shares are above $145: put sellers will keep the $3 which turns out to 27% annualized return.

At expiration if shares are below $145: put sellers will buy shares at a 2.9% discount current share price (strike price - put premium / share price).

For protection use a stop loss at $129. Shares will be trading at new recent lows and the down trend would likely continue.

Add a little extra to this months paycheck by selling puts today.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.