UVV Dividend

Universal Corp dividend

Although UVV has a dividend of 0.75 with an ex-dividend date of Apr 5, you can sell covered calls on Universal Corp 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):

Universal Corp (UVV)
Bid Ask Last Change Volume P/E Market Cap
49.90 57.36 57.34 +0.06 108K 12 1.4B

UVV Dividend-Like Income Using Covered Calls

With UVV at 57.34, 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% 1.72 0.5
5% 2.87 0.8
10% 5.73 1.6

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 UVV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 15 60.00 0.50 29 1.7 2.64 (4.6%)
May 17 60.00 1.45 92 1.6 2.64 (4.6%)
5% Yield On UVV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 15 60.00 0.50 29 1.7 2.64 (4.6%)
May 17 60.00 1.45 92 1.6 2.64 (4.6%)
10% Yield On UVV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 15 60.00 0.50 29 1.7 2.64 (4.6%)
May 17 60.00 1.45 92 1.6 2.64 (4.6%)

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