AWK Dividend

Although AWK has a dividend of 0.83 with an ex-dividend date of Aug 12, you can sell covered calls on American Water Works Company, Inc. 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):

American Water Works Company, Inc. (AWK)
Bid	Ask	Last	Change	Volume	P/E	Market Cap
138.10	145.80	145.72	+5.48	2.7M	26	27B

AWK Dividend-Like Income Using Covered Calls

With AWK at 145.72, 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%	4.37	1.2
5%	7.29	2.0
10%	14.57	4.0

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 AWK Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Aug 15	150.00	0.60	15	4.0	4.20 (2.9%)
Sep 19	150.00	2.45	50	4.9	4.20 (2.9%)

5% Yield On AWK Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Aug 15	150.00	0.60	15	4.0	4.20 (2.9%)
Sep 19	150.00	2.45	50	4.9	4.20 (2.9%)

10% Yield On AWK Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Aug 15	150.00	0.60	15	4.0	4.20 (2.9%)
Sep 19	150.00	2.45	50	4.9	4.20 (2.9%)

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Want more examples? AWI Dividend | AWR Dividend