MGEE Dividend

MGE ENERGY dividend

Although MGEE has a dividend of 0.34 with an ex-dividend date of Nov 29, you can sell covered calls on MGE ENERGY to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 2:40 PM ET):

MGE ENERGY (MGEE)
Bid Ask Last Change Volume P/E Market Cap
63.21 63.52 63.25 +0.04 15K 22 2.2B

MGEE Dividend-Like Income Using Covered Calls

With MGEE at 63.25, 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% 1.90 0.5
5% 3.16 0.9
10% 6.33 1.7

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 MGEE Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 65.00 0.40 61 0.7 1.48 (2.3%)
Feb 15 65.00 1.15 117 1.0 1.48 (2.3%)
5% Yield On MGEE Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Feb 15 65.00 1.15 117 1.0 1.48 (2.3%)
May 17 65.00 1.85 208 0.9 1.48 (2.3%)

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