CULP Dividend

Although CULP has a dividend of 0.10 with an ex-dividend date of Jul 3, you can sell covered calls on Culp, Inc to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 4:16 PM ET):

Culp, Inc (CULP)
Bid Ask Last Change Volume P/E Market Cap
18.29 18.40 18.41 +0.05 39K 12 0.2B

CULP Dividend-Like Income Using Covered Calls

With CULP at 18.41, 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% 0.55 0.2
5% 0.92 0.3
10% 1.84 0.5

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 CULP Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jul 19 20.00 0.05 29 0.2 1.60 (8.7%)
Oct 18 22.50 0.20 120 0.2 4.10 (22.3%)
5% Yield On CULP Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 18 20.00 0.70 120 0.6 1.60 (8.7%)
Jan 17 20.00 1.20 211 0.6 1.60 (8.7%)
10% Yield On CULP Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 18 20.00 0.70 120 0.6 1.60 (8.7%)
Jan 17 20.00 1.20 211 0.6 1.60 (8.7%)

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