STEP Dividend
Although STEP has a dividend of 0.28 with an ex-dividend date of Feb 27, you can sell covered calls on StepStone Group Inc. - Class A to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 3:05 PM ET):
| StepStone Group Inc. - Class A (STEP) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 61.08 |
61.32 |
61.30 |
+2.13 |
1.3M |
- |
7.0B |
STEP Dividend-Like Income Using Covered Calls
With STEP at 61.30, 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% |
1.84 |
0.5 |
| 5% |
3.07 |
0.8 |
| 10% |
6.13 |
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 STEP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 17 |
65.00 |
1.05 |
71 |
1.5 |
3.68 (6.0%) |
| Jun 18 |
65.00 |
2.70 |
133 |
2.0 |
3.68 (6.0%) |
| 5% Yield On STEP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 17 |
65.00 |
1.05 |
71 |
1.5 |
3.68 (6.0%) |
| Jun 18 |
65.00 |
2.70 |
133 |
2.0 |
3.68 (6.0%) |
| 10% Yield On STEP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jun 18 |
65.00 |
2.70 |
133 |
2.0 |
3.68 (6.0%) |
| Sep 18 |
65.00 |
4.40 |
225 |
2.0 |
3.68 (6.0%) |
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