CAT Dividend Type Payments
Although CAT has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Caterpillar, Inc 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):
| Caterpillar, Inc (CAT) | ||||||
|---|---|---|---|---|---|---|
| Bid | Ask | Last | Change | Volume | P/E | Market Cap |
| 136.01 | 136.48 | 136.23 | +2.37 | 4.8M | 13 | 77B |
CAT Dividend-Like Income Using Covered Calls
With CAT at 136.23, 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% | 4.09 | 1.1 |
| 5% | 6.81 | 1.9 |
| 10% | 13.62 | 3.7 |
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 CAT Using Covered Calls | ||||||
|---|---|---|---|---|---|---|
| Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
| Jul 26 | 150.00 | 0.10 | 8 | 1.3 | 13.52 (9.9%) | |
| Aug 2 | 150.00 | 0.21 | 15 | 1.4 | 13.52 (9.9%) | |
| 5% Yield On CAT Using Covered Calls | ||||||
|---|---|---|---|---|---|---|
| Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
| Jul 26 | 148.00 | 0.20 | 8 | 2.5 | 11.52 (8.5%) | |
| Aug 2 | 149.00 | 0.28 | 15 | 1.9 | 12.52 (9.2%) | |
| 10% Yield On CAT Using Covered Calls | ||||||
|---|---|---|---|---|---|---|
| Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
| Jul 26 | 146.00 | 0.35 | 8 | 4.4 | 9.52 (7.0%) | |
| Aug 2 | 145.00 | 0.71 | 15 | 4.7 | 8.52 (6.3%) | |
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| Top 10 Open Interest For Aug 16 Expiration | Top 5 High Yield | |||||
|---|---|---|---|---|---|---|
| 1. | SPY dividend | 6. | QQQ dividend | 1. | SNAP dividend | |
| 2. | FXI dividend | 7. | NIO dividend | 2. | HAL dividend | |
| 3. | EEM dividend | 8. | BAC dividend | 3. | ITCI dividend | |
| 4. | SPX dividend | 9. | GLD dividend | 4. | TWTR dividend | |
| 5. | GDX dividend | 10. | EWZ dividend | 5. | CRWD dividend | |
Want more examples? CASY Dividend | CATM Dividend
