YieldBoost Dominion Energy From 4.6% To 12.1% Using Options
September 18, 2024 at 11:37 AM EDT
Shareholders of Dominion Energy Inc (D) looking to boost their income beyond the stock's 4.6% annualized dividend yield can sell the June 2025 covered call at the $60 strike and collect the premium based on the $3.30 bid, which annualizes to an additional 7.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.1% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but D shares would have to climb 3.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9% return from this trading level, in addition to any dividends collected before the stock was called.