DGX Dividend

Although DGX has a dividend of 0.80 with an ex-dividend date of Jul 7, you can sell covered calls on Quest Diagnostics Incorporated to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 4:16 PM ET):

Quest Diagnostics Incorporated (DGX)
Bid	Ask	Last	Change	Volume	P/E	Market Cap
174.39	179.29	178.24	+0.12	993K	23	20B

DGX Dividend-Like Income Using Covered Calls

With DGX at 178.24, 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%	5.35	1.5
5%	8.91	2.4
10%	17.82	4.9

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 DGX Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Aug 15	180.00	6.50	88	7.4	0.71 (0.4%)
Jul 18	180.00	4.50	60	7.5	0.71 (0.4%)

5% Yield On DGX Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Aug 15	180.00	6.50	88	7.4	0.71 (0.4%)
Jul 18	180.00	4.50	60	7.5	0.71 (0.4%)

10% Yield On DGX Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Aug 15	180.00	6.50	88	7.4	0.71 (0.4%)
Jul 18	180.00	4.50	60	7.5	0.71 (0.4%)

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Want more examples? DGT Dividend | DGZ Dividend