DBI Dividend Type Payments
Although DBI has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Designer Brands Inc. Class A to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):
| Designer Brands Inc. Class A (DBI) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 7.31 |
7.68 |
7.43 |
-0.55 |
1.9M |
- |
0.4B |
DBI Dividend-Like Income Using Covered Calls
With DBI at 7.43, 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% |
0.22 |
0.1 |
| 5% |
0.37 |
0.1 |
| 10% |
0.74 |
0.2 |
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 DBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jan 16 |
8.00 |
0.20 |
17 |
1.2 |
0.32 (4.3%) |
| Apr 17 |
10.00 |
0.50 |
108 |
0.5 |
2.32 (31.2%) |
| 5% Yield On DBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jan 16 |
8.00 |
0.20 |
17 |
1.2 |
0.32 (4.3%) |
| Apr 17 |
10.00 |
0.50 |
108 |
0.5 |
2.32 (31.2%) |
| 10% Yield On DBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jan 16 |
8.00 |
0.20 |
17 |
1.2 |
0.32 (4.3%) |
| Apr 17 |
10.00 |
0.50 |
108 |
0.5 |
2.32 (31.2%) |
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