PBT Dividend
Although PBT has a dividend of 0.01 with an ex-dividend date of Jun 30, you can sell covered calls on Permian Basin Royalty Trust to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 12:55 PM ET):
| Permian Basin Royalty Trust (PBT) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 12.33 |
12.38 |
12.35 |
+0.30 |
53K |
25 |
0.6B |
PBT Dividend-Like Income Using Covered Calls
With PBT at 12.35, 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% |
0.37 |
0.1 |
| 5% |
0.62 |
0.2 |
| 10% |
1.24 |
0.3 |
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 PBT Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
12.50 |
0.40 |
51 |
0.8 |
0.12 (1.0%) |
| Jul 18 |
12.50 |
0.25 |
23 |
1.1 |
0.12 (1.0%) |
| 5% Yield On PBT Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
12.50 |
0.40 |
51 |
0.8 |
0.12 (1.0%) |
| Jul 18 |
12.50 |
0.25 |
23 |
1.1 |
0.12 (1.0%) |
| 10% Yield On PBT Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
12.50 |
0.40 |
51 |
0.8 |
0.12 (1.0%) |
| Jul 18 |
12.50 |
0.25 |
23 |
1.1 |
0.12 (1.0%) |
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