AIR Dividend Type Payments

AAR Corp. dividend

Although AIR has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on AAR Corp. to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 4:16 PM ET):

AAR Corp. (AIR)
Bid Ask Last Change Volume P/E Market Cap
69.58 89.17 81.81 +1.73 422K 101 5.8B

AIR Dividend-Like Income Using Covered Calls

With AIR at 81.81, 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% 2.45 0.7
5% 4.09 1.1
10% 8.18 2.2

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 AIR Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 15 100.00 1.60 183 0.9 10.83 (13.2%)
Feb 20 90.00 2.45 99 2.5 0.83 (1.0%)
5% Yield On AIR Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 15 90.00 4.60 183 2.5 0.83 (1.0%)
Feb 20 90.00 2.45 99 2.5 0.83 (1.0%)
10% Yield On AIR Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 15 90.00 4.60 183 2.5 0.83 (1.0%)
Feb 20 90.00 2.45 99 2.5 0.83 (1.0%)

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