FRME Dividend

First Merchants Corp dividend

Although FRME has a dividend of 0.22 with an ex-dividend date of Feb 28, you can sell covered calls on First Merchants Corp 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):

First Merchants Corp (FRME)
Bid Ask Last Change Volume P/E Market Cap
40.79 41.98 40.79 -0.21 178K 14 2.0B

FRME Dividend-Like Income Using Covered Calls

With FRME at 40.79, 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% 1.22 0.3
5% 2.04 0.6
10% 4.08 1.1

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 FRME Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 20 45.00 1.05 211 0.5 3.02 (7.4%)

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