DFS Dividend

DISCOVER FINANCIAL dividend

Although DFS has a dividend of 0.40 with an ex-dividend date of Nov 20, you can sell covered calls on DISCOVER FINANCIAL to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 12:00 PM ET):

DISCOVER FINANCIAL (DFS)
Bid Ask Last Change Volume P/E Market Cap
76.26 76.29 76.28 +1.34 687K 12 26B

DFS Dividend-Like Income Using Covered Calls

With DFS at 76.28, 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% 2.29 0.6
5% 3.81 1.0
10% 7.63 2.1

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 DFS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 80.50 0.10 8 1.3 4.21 (5.5%)
Nov 2 81.50 0.10 15 0.7 5.21 (6.8%)
5% Yield On DFS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 80.50 0.10 8 1.3 4.21 (5.5%)
Nov 2 80.50 0.20 15 1.3 4.21 (5.5%)
10% Yield On DFS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 79.50 0.20 8 2.5 3.21 (4.2%)
Nov 2 79.50 0.35 15 2.3 3.21 (4.2%)

Want to increase dividends with covered calls?  Sign Up For A Free Trial

 
Top 10 Open Interest For Nov 16 Expiration     Top 5 High Yield
1.SPY dividend 6.SPX dividend   1.UVXY dividend
2.EWZ dividend 7.FXI dividend   2.AMD dividend
3.EEM dividend 8.VXX dividend   3.SKX dividend
4.PBR dividend 9.IWM dividend   4.SNAP dividend
5.QQQ dividend 10.BAC dividend   5.SQ dividend

Want more examples? DFRG Dividend | DG Dividend