PM Dividend

Philip Morris, Inc dividend

Although PM has a dividend of 1.14 with an ex-dividend date of Mar 25, you can sell covered calls on Philip Morris, Inc to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 10:55 AM ET):

Philip Morris, Inc (PM)
Bid Ask Last Change Volume P/E Market Cap
91.01 91.02 91.02 +0.28 1.2M 18 141B

PM Dividend-Like Income Using Covered Calls

With PM at 91.02, 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% 2.73 0.7
5% 4.55 1.2
10% 9.10 2.5

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 PM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 22 92.50 0.11 4 2.8 1.48 (1.6%)
Mar 29 93.00 0.10 11 0.9 1.98 (2.2%)
5% Yield On PM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 22 92.50 0.11 4 2.8 1.48 (1.6%)
Mar 29 92.00 0.28 11 2.5 0.98 (1.1%)
10% Yield On PM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 22 92.50 0.11 4 2.8 1.48 (1.6%)
Mar 29 92.00 0.28 11 2.5 0.98 (1.1%)

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