BF.B Dividend

Although BF.B has a dividend of 0.16 with an ex-dividend date of Sep 5, you can sell covered calls on BROWN-FORMAN 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):

BROWN-FORMAN (BF.B)
Bid Ask Last Change Volume P/E Market Cap
53.61 53.57 53.57 +0.67 707K 36 26B

BF.B Dividend-Like Income Using Covered Calls

With BF.B at 53.57, 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% 1.61 0.4
5% 2.68 0.7
10% 5.36 1.5

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 BF.B Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 21 54.00 0.20 36 0.6 0.43 (0.8%)
Mar 15 55.00 2.00 211 0.9 1.43 (2.7%)
5% Yield On BF.B Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 15 55.00 2.00 211 0.9 1.43 (2.7%)

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