KBH Dividend

KB HOME dividend

Although KBH has a dividend of 0.03 with an ex-dividend date of Nov 14, you can sell covered calls on KB HOME 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):

KB HOME (KBH)
Bid Ask Last Change Volume P/E Market Cap
20.20 22.81 20.69 -0.23 2.1M 15 1.8B

KBH Dividend-Like Income Using Covered Calls

With KBH at 20.69, 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% 0.62 0.2
5% 1.03 0.3
10% 2.07 0.6

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 KBH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 24.00 0.13 36 0.4 1.19 (5.8%)
Jan 18 26.00 0.22 99 0.2 3.19 (15.4%)
5% Yield On KBH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 24.00 0.13 36 0.4 1.19 (5.8%)
Jan 18 25.00 0.35 99 0.4 2.19 (10.6%)
10% Yield On KBH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 23.00 0.27 36 0.8 0.19 (0.9%)
Jan 18 23.00 0.77 99 0.8 0.19 (0.9%)

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