AGM Dividend

FEDERAL AGRICULTURAL MTG dividend

Although AGM has a dividend of 0.58 with an ex-dividend date of Sep 13, you can sell covered calls on FEDERAL AGRICULTURAL MTG 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):

FEDERAL AGRICULTURAL MTG (AGM)
Bid Ask Last Change Volume P/E Market Cap
78.56 89.45 78.46 +1.73 47K 10 0.8B

AGM Dividend-Like Income Using Covered Calls

With AGM at 78.46, 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% 2.35 0.6
5% 3.92 1.1
10% 7.85 2.1

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
Nov 16 90.00 0.75 89 0.8 0.55 (0.7%)
Feb 15 95.00 1.20 180 0.7 5.55 (7.1%)
5% Yield On AGM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Feb 15 90.00 2.15 180 1.2 0.55 (0.7%)

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