SWM Dividend

SCHWEITZER-MAUDUIT INTL dividend

Although SWM has a dividend of 0.43 with an ex-dividend date of Aug 23, you can sell covered calls on SCHWEITZER-MAUDUIT INTL to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):

SCHWEITZER-MAUDUIT INTL (SWM)
Bid Ask Last Change Volume P/E Market Cap
39.84 42.80 39.84 -0.36 85K 28 1.2B

SWM Dividend-Like Income Using Covered Calls

With SWM at 39.84, 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% 1.20 0.3
5% 1.99 0.5
10% 3.98 1.1

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 SWM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 45.00 0.50 129 0.4 2.20 (5.5%)
Mar 15 45.00 0.85 213 0.4 2.20 (5.5%)

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