PSEC Dividend

Prospect Capital Corporation - Closed End Fund dividend

Although PSEC has a dividend of 0.05 with an ex-dividend date of Dec 27, you can sell covered calls on Prospect Capital Corporation - Closed End Fund 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):

Prospect Capital Corporation - Closed End Fund (PSEC)
Bid Ask Last Change Volume P/E Market Cap
4.75 4.76 4.78 +0.03 1.6M 68 2.1B

PSEC Dividend-Like Income Using Covered Calls

With PSEC at 4.78, 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% 0.14 0.0
5% 0.24 0.1
10% 0.48 0.1

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 PSEC Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jan 17 5.00 0.05 50 0.1 0.24 (5.0%)
Feb 21 5.00 0.05 85 0.1 0.24 (5.0%)
5% Yield On PSEC Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jan 17 5.00 0.05 50 0.1 0.24 (5.0%)

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