CMI Dividend

CUMMINS dividend

Although CMI has a dividend of 1.14 with an ex-dividend date of Aug 21, you can sell covered calls on CUMMINS to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 4:16 PM ET):

CUMMINS (CMI)
Bid Ask Last Change Volume P/E Market Cap
135.07 138.00 135.88 +1.20 813K 24 22B

CMI Dividend-Like Income Using Covered Calls

With CMI at 135.88, 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% 4.08 1.1
5% 6.79 1.9
10% 13.59 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 CMI Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jul 20 142.00 0.05 4 1.3 4.00 (2.9%)
Jul 27 143.00 0.15 11 1.4 5.00 (3.7%)
5% Yield On CMI Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jul 20 140.00 0.10 4 2.5 2.00 (1.5%)
Jul 27 142.00 0.25 11 2.3 4.00 (2.9%)
10% Yield On CMI Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jul 20 139.00 0.20 4 5.0 1.00 (0.7%)
Jul 27 140.00 0.50 11 4.5 2.00 (1.5%)

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Top 10 Open Interest For Jul 20 Expiration     Top 5 High Yield
1.SPY dividend 6.EWZ dividend   1.SKX dividend
2.EEM dividend 7.MU dividend   2.CLF dividend
3.XLF dividend 8.T dividend   3.VKTX dividend
4.BAC dividend 9.QQQ dividend   4.IQ dividend
5.SPX dividend 10.VXX dividend   5.EBAY dividend

Want more examples? CMG Dividend | CMO Dividend