ARCO Dividend
Although ARCO has a dividend of 0.06 with an ex-dividend date of Dec 22, you can sell covered calls on Arcos Dorados Holdings Inc. Class A Shares to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 4:16 PM ET):
Arcos Dorados Holdings Inc. Class A Shares (ARCO) | ||||||
---|---|---|---|---|---|---|
Bid | Ask | Last | Change | Volume | P/E | Market Cap |
6.85 | 7.00 | 6.93 | +0.11 | 2.3M | 10 | 1.4B |
ARCO Dividend-Like Income Using Covered Calls
With ARCO at 6.93, 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% | 0.21 | 0.1 |
5% | 0.35 | 0.1 |
10% | 0.69 | 0.2 |
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 ARCO Using Covered Calls | ||||||
---|---|---|---|---|---|---|
Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
Nov 21 | 7.50 | 0.20 | 40 | 0.5 | 0.50 (7.2%) | |
May 15 | 7.50 | 0.40 | 215 | 0.2 | 0.50 (7.2%) |
5% Yield On ARCO Using Covered Calls | ||||||
---|---|---|---|---|---|---|
Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
Nov 21 | 7.50 | 0.20 | 40 | 0.5 | 0.50 (7.2%) | |
May 15 | 7.50 | 0.40 | 215 | 0.2 | 0.50 (7.2%) |
10% Yield On ARCO Using Covered Calls | ||||||
---|---|---|---|---|---|---|
Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
Nov 21 | 7.50 | 0.20 | 40 | 0.5 | 0.50 (7.2%) | |
Feb 20 | 7.50 | 0.35 | 131 | 0.3 | 0.50 (7.2%) |
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Want more examples? ARCC Dividend | ARCT Dividend