PSEC Dividend

Prospect Capital Corporation - Closed End Fund dividend

Although PSEC has a dividend of 0.05 with an ex-dividend date of Jan 29, 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
4.34 4.35 4.33 -0.01 2.4M 62 1.9B

PSEC Dividend-Like Income Using Covered Calls

With PSEC at 4.33, 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% 0.13 0.0
5% 0.22 0.1
10% 0.43 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
May 16 4.50 0.15 134 0.1 0.15 (3.5%)
Jan 16 5.00 0.15 379 0.0 0.65 (15.0%)
5% Yield On PSEC Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 16 4.50 0.15 134 0.1 0.15 (3.5%)

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