AGM Dividend

Federal Agricultural Mortgage Corp dividend

Although AGM has a dividend of 0.70 with an ex-dividend date of Mar 14, you can sell covered calls on Federal Agricultural Mortgage Corp 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):

Federal Agricultural Mortgage Corp (AGM)
Bid Ask Last Change Volume P/E Market Cap
79.51 81.05 81.05 +9.34 97K - 0.8B

AGM Dividend-Like Income Using Covered Calls

With AGM at 81.05, here's a table showing how big the annual "dividend" (ie. 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% 2.43 0.7
5% 4.05 1.1
10% 8.11 2.2

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 AGM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Apr 18 85.00 0.85 56 1.5 3.95 (4.9%)
May 17 90.00 1.10 85 1.3 8.95 (11.0%)
5% Yield On AGM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Apr 18 85.00 0.85 56 1.5 3.95 (4.9%)
May 17 90.00 1.10 85 1.3 8.95 (11.0%)
10% Yield On AGM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 17 85.00 2.35 85 2.8 3.95 (4.9%)

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