NRG Dividend

NRG ENERGY dividend

Although NRG has a dividend of 0.03 with an ex-dividend date of Oct 31, you can sell covered calls on NRG ENERGY to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 4:16 PM ET):

NRG ENERGY (NRG)
Bid Ask Last Change Volume P/E Market Cap
35.00 37.40 36.99 +0.17 2.1M - 11B

NRG Dividend-Like Income Using Covered Calls

With NRG at 36.99, 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% 1.11 0.3
5% 1.85 0.5
10% 3.70 1.0

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 NRG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 38.50 0.05 5 1.0 1.10 (3.0%)
Nov 2 39.50 0.05 12 0.4 2.10 (5.7%)
5% Yield On NRG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 38.50 0.05 5 1.0 1.10 (3.0%)
Nov 2 39.00 0.10 12 0.8 1.60 (4.3%)
10% Yield On NRG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 38.00 0.10 5 2.0 0.60 (1.6%)
Nov 2 38.50 0.15 12 1.3 1.10 (3.0%)

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