BABA Dividend Type Payments

ALIBABA GROUP HOLDING LTD dividend

Although BABA has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on ALIBABA GROUP HOLDING LTD 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):

ALIBABA GROUP HOLDING LTD (BABA)
Bid Ask Last Change Volume P/E Market Cap
149.35 149.89 149.53 -4.57 17.5M 46 402B

BABA Dividend-Like Income Using Covered Calls

With BABA at 149.53, 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% 4.49 1.2
5% 7.48 2.0
10% 14.95 4.1

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 BABA Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 160.00 0.14 5 2.8 10.11 (6.8%)
Nov 30 172.50 0.15 12 1.3 22.61 (15.1%)
5% Yield On BABA Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 160.00 0.14 5 2.8 10.11 (6.8%)
Nov 30 167.50 0.36 12 3.0 17.61 (11.8%)
10% Yield On BABA Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 157.50 0.31 5 6.2 7.61 (5.1%)
Nov 30 165.00 0.54 12 4.5 15.11 (10.1%)

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Want more examples? BAB Dividend | BABY Dividend