GDS Dividend Type Payments

Although GDS has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on GDS Holdings Ltd ADS to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 4:16 PM ET):

GDS Holdings Ltd ADS (GDS)
Bid Ask Last Change Volume P/E Market Cap
37.97 39.50 39.38 +0.48 341K - 2.9B

GDS Dividend-Like Income Using Covered Calls

With GDS at 39.38, 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% 1.18 0.3
5% 1.97 0.5
10% 3.94 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 GDS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 16 45.00 0.55 30 1.8 5.50 (14.0%)
Sep 20 50.00 0.35 65 0.5 10.50 (26.7%)
5% Yield On GDS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 16 45.00 0.55 30 1.8 5.50 (14.0%)
Sep 20 49.00 0.55 65 0.8 9.50 (24.1%)
10% Yield On GDS Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 16 45.00 0.55 30 1.8 5.50 (14.0%)
Sep 20 47.00 0.80 65 1.2 7.50 (19.0%)

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