SWBI Dividend
Although SWBI has a dividend of 0.13 with an ex-dividend date of Dec 18, you can sell covered calls on Smith & Wesson Brands, Inc. to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 11:40 AM ET):
| Smith & Wesson Brands, Inc. (SWBI) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 10.74 |
10.75 |
10.73 |
-0.10 |
196K |
40 |
0.5B |
SWBI Dividend-Like Income Using Covered Calls
With SWBI at 10.73, 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% |
0.32 |
0.1 |
| 5% |
0.54 |
0.1 |
| 10% |
1.07 |
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 SWBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 19 |
11.00 |
0.05 |
5 |
1.0 |
0.25 (2.3%) |
| Jan 16 |
11.00 |
0.20 |
33 |
0.6 |
0.25 (2.3%) |
| 5% Yield On SWBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 19 |
11.00 |
0.05 |
5 |
1.0 |
0.25 (2.3%) |
| Jan 16 |
11.00 |
0.20 |
33 |
0.6 |
0.25 (2.3%) |
| 10% Yield On SWBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 19 |
11.00 |
0.05 |
5 |
1.0 |
0.25 (2.3%) |
| Jan 16 |
11.00 |
0.20 |
33 |
0.6 |
0.25 (2.3%) |
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