T Dividend Type Payments

AT&T dividend

Although T has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on AT&T to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 4:16 PM ET):

AT&T (T)
Bid Ask Last Change Volume P/E Market Cap
32.05 32.07 32.05 +0.12 21.3M 6.4 196B

T Dividend-Like Income Using Covered Calls

With T at 32.05, 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% 0.96 0.3
5% 1.60 0.4
10% 3.21 0.9

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 T Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 25 33.00 0.05 8 0.6 0.93 (2.9%)
Jun 1 33.00 0.12 15 0.8 0.93 (2.9%)
5% Yield On T Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 25 33.00 0.05 8 0.6 0.93 (2.9%)
Jun 1 33.00 0.12 15 0.8 0.93 (2.9%)
10% Yield On T Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 25 32.50 0.12 8 1.5 0.43 (1.3%)
Jun 1 32.50 0.20 15 1.3 0.43 (1.3%)

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