MBWM Dividend

Mercantile Bank Corporation dividend

Although MBWM has a dividend of 0.38 with an ex-dividend date of Sep 5, you can sell covered calls on Mercantile Bank Corporation to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 1:55 PM ET):

Mercantile Bank Corporation (MBWM)
Bid Ask Last Change Volume P/E Market Cap
44.40 44.65 44.50 -0.54 20K 9.0 0.7B

MBWM Dividend-Like Income Using Covered Calls

With MBWM at 44.50, here's a table showing how big the annual "dividend" (i.e. 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% 1.34 0.4
5% 2.23 0.6
10% 4.45 1.2

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 MBWM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 19 45.00 0.55 45 1.2 0.35 (0.8%)
Dec 19 45.00 1.00 136 0.7 0.35 (0.8%)
5% Yield On MBWM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 19 45.00 0.55 45 1.2 0.35 (0.8%)
Dec 19 45.00 1.00 136 0.7 0.35 (0.8%)
10% Yield On MBWM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 19 45.00 0.55 45 1.2 0.35 (0.8%)

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