ARCO Dividend

ARCOS DORADOS HOLDINGS dividend

Although ARCO has a dividend of 0.05 with an ex-dividend date of Oct 1, you can sell covered calls on ARCOS DORADOS HOLDINGS 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):

ARCOS DORADOS HOLDINGS (ARCO)
Bid Ask Last Change Volume P/E Market Cap
6.60 6.90 6.65 -0.10 651K 15 1.4B

ARCO Dividend-Like Income Using Covered Calls

With ARCO at 6.65, 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% 0.20 0.1
5% 0.33 0.1
10% 0.67 0.2

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 ARCO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 7.50 0.15 92 0.2 0.60 (9.0%)
Feb 15 7.50 0.35 183 0.2 0.60 (9.0%)
5% Yield On ARCO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 7.50 0.15 92 0.2 0.60 (9.0%)
Feb 15 7.50 0.35 183 0.2 0.60 (9.0%)
10% Yield On ARCO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Feb 15 7.50 0.35 183 0.2 0.60 (9.0%)

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