CDNS Dividend Type Payments

CADENCE DESIGN SYSTEMS dividend

Although CDNS has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on CADENCE DESIGN SYSTEMS to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 11:50 AM ET):

CADENCE DESIGN SYSTEMS (CDNS)
Bid Ask Last Change Volume P/E Market Cap
40.02 40.04 40.03 -0.37 715K 52 11B

CDNS Dividend-Like Income Using Covered Calls

With CDNS at 40.03, 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% 1.20 0.3
5% 2.00 0.5
10% 4.00 1.1

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 CDNS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 45.00 0.10 30 0.3 4.96 (12.4%)
Feb 15 47.00 0.45 121 0.4 6.96 (17.4%)
5% Yield On CDNS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 44.00 0.20 30 0.7 3.96 (9.9%)
Feb 15 45.00 0.80 121 0.7 4.96 (12.4%)
10% Yield On CDNS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 43.00 0.35 30 1.2 2.96 (7.4%)
Feb 15 42.00 1.75 121 1.4 1.96 (4.9%)

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