WMG Dividend

Although WMG has a dividend of 0.18 with an ex-dividend date of Feb 24, you can sell covered calls on Warner Music Group Corp. - Class A 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):

Warner Music Group Corp. - Class A (WMG)
Bid	Ask	Last	Change	Volume	P/E	Market Cap
34.00	35.94	35.26	-0.31	1.8M	37	19B

WMG Dividend-Like Income Using Covered Calls

With WMG at 35.26, 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%	1.06	0.3
5%	1.76	0.5
10%	3.53	1.0

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 WMG Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Apr 17	36.00	1.00	56	1.8	0.06 (0.2%)
Oct 17	36.00	2.10	239	0.9	0.06 (0.2%)

5% Yield On WMG Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Apr 17	36.00	1.00	56	1.8	0.06 (0.2%)
Oct 17	36.00	2.10	239	0.9	0.06 (0.2%)

10% Yield On WMG Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Apr 17	36.00	1.00	56	1.8	0.06 (0.2%)
Jul 18	36.00	2.15	148	1.5	0.06 (0.2%)

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