ARCC Dividend Type Payments
Although ARCC has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Ares Capital Corporation - Closed End Fund to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 4:16 PM ET):
| Ares Capital Corporation - Closed End Fund (ARCC) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 20.35 |
20.50 |
20.40 |
+0.31 |
4.2M |
8.2 |
14B |
ARCC Dividend-Like Income Using Covered Calls
With ARCC at 20.40, 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% |
0.61 |
0.2 |
| 5% |
1.02 |
0.3 |
| 10% |
2.04 |
0.6 |
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 ARCC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 16 |
21.00 |
0.30 |
30 |
1.0 |
0.50 (2.5%) |
| Sep 19 |
21.00 |
0.70 |
156 |
0.4 |
0.50 (2.5%) |
| 5% Yield On ARCC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 16 |
21.00 |
0.30 |
30 |
1.0 |
0.50 (2.5%) |
| Sep 19 |
21.00 |
0.70 |
156 |
0.4 |
0.50 (2.5%) |
| 10% Yield On ARCC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 16 |
21.00 |
0.30 |
30 |
1.0 |
0.50 (2.5%) |
| Jun 20 |
21.00 |
0.45 |
65 |
0.7 |
0.50 (2.5%) |
Want to increase dividends with covered calls? Sign Up For A Free Trial
