AEP Dividend Type Payments

Although AEP has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on American Electric Power Company, Inc. to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 1:00 PM ET):

American Electric Power Company, Inc. (AEP)
Bid	Ask	Last	Change	Volume	P/E	Market Cap
97.07	97.09	97.09	-0.63	470K	20	52B

AEP Dividend-Like Income Using Covered Calls

With AEP at 97.09, here's a table showing how big the annual "dividend" (i.e. total annual call premium received) would need to be to attain 3%, 5%, and 10% annual yields. Also shown is the equivalent number of cents/day necessary to achieve each yield:

Annual Yield	Annual Premium	Cents/Day
3%	2.91	0.8
5%	4.85	1.3
10%	9.71	2.7

So now we need to find out of the money covered calls that pay at least the prescribed cents/day amount of time premium. That will generate income and, because they are out of the money, leave room for some upside potential on the stock. Here are some examples:

3% Yield On AEP Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Nov 15	100.00	1.40	37	3.8	2.91 (3.0%)
Oct 18	100.00	0.15	9	1.7	2.91 (3.0%)

5% Yield On AEP Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Nov 15	100.00	1.40	37	3.8	2.91 (3.0%)
Oct 18	100.00	0.15	9	1.7	2.91 (3.0%)

10% Yield On AEP Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Nov 15	100.00	1.40	37	3.8	2.91 (3.0%)
Oct 18	97.50	0.85	9	9.4	0.41 (0.4%)

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Want more examples? AEO Dividend | AER Dividend