ARCO Dividend

Arcos Dorados Holdings Inc. Class A Shares dividend

Although ARCO has a dividend of 0.06 with an ex-dividend date of Dec 23, you can sell covered calls on Arcos Dorados Holdings Inc. Class A Shares 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):

Arcos Dorados Holdings Inc. Class A Shares (ARCO)
Bid Ask Last Change Volume P/E Market Cap
8.38 8.79 8.50 -0.26 1.5M 10 1.8B

ARCO Dividend-Like Income Using Covered Calls

With ARCO at 8.50, here's a table showing how big the annual "dividend" (i.e. 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% 0.26 0.1
5% 0.43 0.1
10% 0.85 0.2

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 ARCO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 16 10.00 0.35 179 0.2 1.21 (14.2%)
Feb 21 10.00 0.10 95 0.1 1.21 (14.2%)
5% Yield On ARCO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 16 10.00 0.35 179 0.2 1.21 (14.2%)

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