ARR Dividend

Although ARR has a dividend of 0.24 with an ex-dividend date of May 15, you can sell covered calls on ARMOUR Residential REIT, Inc. to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 4:16 PM ET):

ARMOUR Residential REIT, Inc. (ARR)
Bid	Ask	Last	Change	Volume	P/E	Market Cap
16.57	16.77	16.65	+0.23	3.5M	-	1.3B

ARR Dividend-Like Income Using Covered Calls

With ARR at 16.65, 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%	0.50	0.1
5%	0.83	0.2
10%	1.67	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 ARR Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
May 16	17.00	0.15	18	0.8	0.23 (1.4%)
Oct 17	17.00	0.50	172	0.3	0.23 (1.4%)

5% Yield On ARR Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
May 16	17.00	0.15	18	0.8	0.23 (1.4%)
Oct 17	17.00	0.50	172	0.3	0.23 (1.4%)

10% Yield On ARR Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
May 16	17.00	0.15	18	0.8	0.23 (1.4%)
Jul 18	17.00	0.50	81	0.6	0.23 (1.4%)

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Want more examples? ARP Dividend | ARRY Dividend