DISCA Dividend Type Payments

DISCOVERY COMMUNICATIONS dividend

Although DISCA has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on DISCOVERY COMMUNICATIONS 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):

DISCOVERY COMMUNICATIONS (DISCA)
Bid Ask Last Change Volume P/E Market Cap
32.36 34.00 33.40 +0.27 4.6M - 16B

DISCA Dividend-Like Income Using Covered Calls

With DISCA at 33.40, 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% 1.00 0.3
5% 1.67 0.5
10% 3.34 0.9

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 DISCA Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 37.50 0.20 29 0.7 3.50 (10.5%)
Jan 18 37.50 0.70 92 0.8 3.50 (10.5%)
5% Yield On DISCA Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 37.50 0.20 29 0.7 3.50 (10.5%)
Jan 18 37.50 0.70 92 0.8 3.50 (10.5%)
10% Yield On DISCA Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 35.00 0.70 29 2.4 1.00 (3.0%)
Jan 18 35.00 1.40 92 1.5 1.00 (3.0%)

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