MERC Dividend
Although MERC has a dividend of 0.08 with an ex-dividend date of Dec 18, you can sell covered calls on Mercer International Inc. 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):
| Mercer International Inc. (MERC) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 6.02 |
6.33 |
6.20 |
-0.15 |
205K |
- |
0.4B |
MERC Dividend-Like Income Using Covered Calls
With MERC at 6.20, 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% |
0.19 |
0.1 |
| 5% |
0.31 |
0.1 |
| 10% |
0.62 |
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 MERC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 16 |
8.00 |
0.20 |
183 |
0.1 |
1.67 (26.9%) |
| Jan 17 |
7.50 |
0.05 |
64 |
0.1 |
1.17 (18.9%) |
| 5% Yield On MERC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 16 |
8.00 |
0.20 |
183 |
0.1 |
1.67 (26.9%) |
| Feb 21 |
7.00 |
0.15 |
99 |
0.2 |
0.67 (10.8%) |
| 10% Yield On MERC Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jan 16 |
7.50 |
0.80 |
428 |
0.2 |
1.17 (18.9%) |
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