BTI Dividend

Although BTI has a dividend of 0.49 with an ex-dividend date of Dec 27, you can sell covered calls on BRITISH AMERICAN TOBACCO to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 1:00 PM ET):

BRITISH AMERICAN TOBACCO (BTI)
Bid Ask Last Change Volume P/E Market Cap
43.26 43.27 43.26 +0.86 1.1M 1.8 97B

BTI Dividend-Like Income Using Covered Calls

With BTI at 43.26, 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% 1.30 0.4
5% 2.16 0.6
10% 4.33 1.2

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 BTI Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 45.00 0.55 29 1.9 1.73 (4.0%)
Dec 21 45.00 1.20 64 1.9 1.73 (4.0%)
5% Yield On BTI Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 45.00 0.55 29 1.9 1.73 (4.0%)
Dec 21 45.00 1.20 64 1.9 1.73 (4.0%)
10% Yield On BTI Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 45.00 0.55 29 1.9 1.73 (4.0%)
Dec 21 45.00 1.20 64 1.9 1.73 (4.0%)

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Top 10 Open Interest For Nov 16 Expiration     Top 5 High Yield
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Want more examples? BTG Dividend | BTK Dividend