MSM Dividend Type Payments

Although MSM has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on MSC Industrial Direct Company, Inc. to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 3:40 PM ET):

MSC Industrial Direct Company, Inc. (MSM)
Bid	Ask	Last	Change	Volume	P/E	Market Cap
84.85	84.94	84.85	+1.54	365K	23	5.4B

MSM Dividend-Like Income Using Covered Calls

With MSM at 84.85, 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%	2.55	0.7
5%	4.24	1.2
10%	8.49	2.3

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 MSM Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Jan 16	85.00	0.20	3	6.7	0.06 (0.1%)
Jun 18	100.00	1.10	156	0.7	15.06 (17.7%)

5% Yield On MSM Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Jan 16	85.00	0.20	3	6.7	0.06 (0.1%)
Jun 18	85.00	4.20	156	2.7	0.06 (0.1%)

10% Yield On MSM Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Jan 16	85.00	0.20	3	6.7	0.06 (0.1%)
Jun 18	85.00	4.20	156	2.7	0.06 (0.1%)

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