CTSH Dividend Type Payments

COGNIZANT TECH SOLUTION dividend

Although CTSH has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on COGNIZANT TECH SOLUTION to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 2:10 PM ET):

COGNIZANT TECH SOLUTION (CTSH)
Bid Ask Last Change Volume P/E Market Cap
73.68 73.71 73.69 +0.10 1.6M 30 43B

CTSH Dividend-Like Income Using Covered Calls

With CTSH at 73.69, 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% 2.21 0.6
5% 3.68 1.0
10% 7.37 2.0

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 CTSH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 77.00 0.05 8 0.6 3.29 (4.5%)
Nov 2 80.50 0.10 15 0.7 6.79 (9.2%)
5% Yield On CTSH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 76.00 0.10 8 1.3 2.29 (3.1%)
Nov 2 79.00 0.20 15 1.3 5.29 (7.2%)
10% Yield On CTSH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 75.50 0.20 8 2.5 1.79 (2.4%)
Nov 2 78.00 0.35 15 2.3 4.29 (5.8%)

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