ITW Dividend Type Payments

ILLINOIS TOOL WORKS dividend

Although ITW has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on ILLINOIS TOOL WORKS to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 2:30 PM ET):

ILLINOIS TOOL WORKS (ITW)
Bid Ask Last Change Volume P/E Market Cap
131.59 131.73 131.65 -1.44 536K 24 45B

ITW Dividend-Like Income Using Covered Calls

With ITW at 131.65, 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% 3.95 1.1
5% 6.58 1.8
10% 13.17 3.6

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 ITW Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 135.00 0.05 3 1.7 3.27 (2.5%)
Oct 26 142.00 0.15 10 1.5 10.27 (7.8%)
5% Yield On ITW Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 134.00 0.15 3 5.0 2.27 (1.7%)
Oct 26 141.00 0.25 10 2.5 9.27 (7.0%)
10% Yield On ITW Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 134.00 0.15 3 5.0 2.27 (1.7%)
Oct 26 139.00 0.50 10 5.0 7.27 (5.5%)

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