AOS Dividend
Although AOS has a dividend of 0.34 with an ex-dividend date of Jan 31, you can sell covered calls on A.O. Smith Corporation to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):
| A.O. Smith Corporation (AOS) | ||||||
|---|---|---|---|---|---|---|
| Bid | Ask | Last | Change | Volume | P/E | Market Cap |
| 70.11 | 71.91 | 70.97 | -1.72 | 1.7M | 19 | 17B |
AOS Dividend-Like Income Using Covered Calls
With AOS at 70.97, 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% | 2.13 | 0.6 |
| 5% | 3.55 | 1.0 |
| 10% | 7.10 | 1.9 |
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 AOS Using Covered Calls | ||||||
|---|---|---|---|---|---|---|
| Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
| Apr 17 | 75.00 | 1.60 | 86 | 1.9 | 3.09 (4.4%) | |
| Jul 18 | 75.00 | 3.30 | 178 | 1.9 | 3.09 (4.4%) | |
| 5% Yield On AOS Using Covered Calls | ||||||
|---|---|---|---|---|---|---|
| Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
| Apr 17 | 75.00 | 1.60 | 86 | 1.9 | 3.09 (4.4%) | |
| Jul 18 | 75.00 | 3.30 | 178 | 1.9 | 3.09 (4.4%) | |
| 10% Yield On AOS Using Covered Calls | ||||||
|---|---|---|---|---|---|---|
| Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
| Feb 21 | 75.00 | 0.65 | 31 | 2.1 | 3.09 (4.4%) | |
| Mar 21 | 75.00 | 1.15 | 59 | 1.9 | 3.09 (4.4%) | |
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| Top 10 Open Interest For Feb 21 Expiration | Top 5 High Yield | |||||
|---|---|---|---|---|---|---|
| 1. | NVDA dividend | 6. | SLV dividend | 1. | QUBT dividend | |
| 2. | TLT dividend | 7. | TSLA dividend | 2. | SMCI dividend | |
| 3. | SPY dividend | 8. | AMZN dividend | 3. | MBLY dividend | |
| 4. | IWM dividend | 9. | AAPL dividend | 4. | SNAP dividend | |
| 5. | FXI dividend | 10. | ASHR dividend | 5. | RIOT dividend | |
Want more examples? AOR Dividend | AOSL Dividend
