CAT Dividend

Although CAT has a dividend of 1.51 with an ex-dividend date of Jan 20, 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 10:45 AM ET):

Caterpillar, Inc. (CAT)
Bid	Ask	Last	Change	Volume	P/E	Market Cap
642.90	644.10	644.11	-3.07	741K	33	303B

CAT Dividend-Like Income Using Covered Calls

With CAT at 644.11, here's a table showing how big the annual "dividend" (i.e. 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%	19.32	5.3
5%	32.21	8.8
10%	64.41	17.6

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
Feb 6	645.00	22.10	22	100.5	0.90 (0.1%)
Feb 13	645.00	24.45	29	84.3	0.90 (0.1%)

5% Yield On CAT Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Feb 6	645.00	22.10	22	100.5	0.90 (0.1%)
Feb 13	645.00	24.45	29	84.3	0.90 (0.1%)

10% Yield On CAT Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Feb 6	645.00	22.10	22	100.5	0.90 (0.1%)
Feb 13	645.00	24.45	29	84.3	0.90 (0.1%)

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Want more examples? CASY Dividend | CATO Dividend