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 Wed 10:50 AM ET):
| Ares Capital Corporation - Closed End Fund (ARCC) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 20.86 |
20.87 |
20.86 |
+0.22 |
1.8M |
10 |
15B |
ARCC Dividend-Like Income Using Covered Calls
With ARCC at 20.86, 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% |
0.63 |
0.2 |
| 5% |
1.04 |
0.3 |
| 10% |
2.09 |
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 |
| Jun 18 |
21.00 |
0.60 |
149 |
0.4 |
0.13 (0.6%) |
| Sep 18 |
21.00 |
0.60 |
241 |
0.2 |
0.13 (0.6%) |
| 5% Yield On ARCC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jun 18 |
21.00 |
0.60 |
149 |
0.4 |
0.13 (0.6%) |
| Feb 20 |
21.00 |
0.35 |
31 |
1.1 |
0.13 (0.6%) |
| 10% Yield On ARCC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 20 |
21.00 |
0.35 |
31 |
1.1 |
0.13 (0.6%) |
| Mar 20 |
21.00 |
0.50 |
59 |
0.8 |
0.13 (0.6%) |
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