T Dividend

AT&T Inc. dividend

Although T has a dividend of 0.28 with an ex-dividend date of Jan 10, you can sell covered calls on AT&T 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):

AT&T Inc. (T)
Bid Ask Last Change Volume P/E Market Cap
22.66 22.74 22.75 +0.18 88.0M 18 162B

T Dividend-Like Income Using Covered Calls

With T at 22.75, 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% 0.68 0.2
5% 1.14 0.3
10% 2.28 0.6

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 T Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 27 23.00 0.07 8 0.9 0.26 (1.1%)
Jan 3 23.00 0.15 15 1.0 0.26 (1.1%)
5% Yield On T Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 27 23.00 0.07 8 0.9 0.26 (1.1%)
Jan 3 23.00 0.15 15 1.0 0.26 (1.1%)
10% Yield On T Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 27 23.00 0.07 8 0.9 0.26 (1.1%)
Jan 3 23.00 0.15 15 1.0 0.26 (1.1%)

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