TGT Dividend

TARGET dividend

Although TGT has a dividend of 0.64 with an ex-dividend date of Nov 20, you can sell covered calls on TARGET 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):

TARGET (TGT)
Bid Ask Last Change Volume P/E Market Cap
84.19 85.98 84.61 +1.81 5.1M 14 44B

TGT Dividend-Like Income Using Covered Calls

With TGT at 84.61, 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% 2.54 0.7
5% 4.23 1.2
10% 8.46 2.3

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 TGT Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 89.50 0.06 8 0.8 3.52 (4.2%)
Oct 26 91.00 0.15 15 1.0 5.02 (5.9%)
5% Yield On TGT Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 88.50 0.12 8 1.5 2.52 (3.0%)
Oct 26 90.00 0.21 15 1.4 4.02 (4.8%)
10% Yield On TGT Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 88.00 0.19 8 2.4 2.02 (2.4%)
Oct 26 88.50 0.40 15 2.7 2.52 (3.0%)

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