CAT Dividend

Caterpillar, Inc dividend

Although CAT has a dividend of 1.03 with an ex-dividend date of Jul 19, 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 Wed 4:16 PM ET):

Caterpillar, Inc (CAT)
Bid Ask Last Change Volume P/E Market Cap
123.55 123.76 123.56 -1.39 4.5M 12 72B

CAT Dividend-Like Income Using Covered Calls

With CAT at 123.56, 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% 3.71 1.0
5% 6.18 1.7
10% 12.36 3.4

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
May 24 128.00 0.04 3 1.3 4.24 (3.4%)
May 31 130.00 0.14 10 1.4 6.24 (5.1%)
5% Yield On CAT Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 24 127.00 0.11 3 3.7 3.24 (2.6%)
May 31 129.00 0.23 10 2.3 5.24 (4.2%)
10% Yield On CAT Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 24 127.00 0.11 3 3.7 3.24 (2.6%)
May 31 128.00 0.37 10 3.7 4.24 (3.4%)

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