TXN Dividend

TEXAS INSTRUMENTS dividend

Although TXN has a dividend of 0.77 with an ex-dividend date of Oct 30, you can sell covered calls on TEXAS INSTRUMENTS to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 4:16 PM ET):

TEXAS INSTRUMENTS (TXN)
Bid Ask Last Change Volume P/E Market Cap
102.01 102.45 102.15 +2.72 5.6M 22 97B

TXN Dividend-Like Income Using Covered Calls

With TXN at 102.15, 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% 3.06 0.8
5% 5.11 1.4
10% 10.22 2.8

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 TXN Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 106.00 0.05 4 1.3 3.55 (3.5%)
Oct 26 111.00 0.14 11 1.3 8.55 (8.4%)
5% Yield On TXN Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 105.00 0.14 4 3.5 2.55 (2.5%)
Oct 26 110.00 0.21 11 1.9 7.55 (7.4%)
10% Yield On TXN Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 105.00 0.14 4 3.5 2.55 (2.5%)
Oct 26 109.00 0.32 11 2.9 6.55 (6.4%)

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