ARCC Dividend
Although ARCC has a dividend of 0.48 with an ex-dividend date of Mar 13, you can sell covered calls on Ares Capital Corporation - Closed End Fund to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):
| Ares Capital Corporation - Closed End Fund (ARCC) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 19.82 |
19.92 |
19.91 |
-0.05 |
5.0M |
11 |
14B |
ARCC Dividend-Like Income Using Covered Calls
With ARCC at 19.91, 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% |
0.60 |
0.2 |
| 5% |
1.00 |
0.3 |
| 10% |
1.99 |
0.5 |
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 ARCC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 20 |
20.00 |
0.20 |
10 |
2.0 |
0.08 (0.4%) |
| Mar 20 |
20.00 |
0.35 |
38 |
0.9 |
0.08 (0.4%) |
| 5% Yield On ARCC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 20 |
20.00 |
0.20 |
10 |
2.0 |
0.08 (0.4%) |
| Mar 20 |
20.00 |
0.35 |
38 |
0.9 |
0.08 (0.4%) |
| 10% Yield On ARCC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 20 |
20.00 |
0.20 |
10 |
2.0 |
0.08 (0.4%) |
| Mar 20 |
20.00 |
0.35 |
38 |
0.9 |
0.08 (0.4%) |
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