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Dividend Captures for Fun and Profit

IP Dividend Chart IP Dividend data by YCharts

International Paper(IP - Get Report)

Background: International Paper operates as a paper and packaging company in North America, Europe, Latin America, Russia, Asia, and north Africa. The company's Industrial Packaging segment manufactures containerboards, including linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft. The company was founded in 1898 and is based in Memphis, Tenn. International Paper trades an average of 4.2 million shares per day with a marketcap of $16 billion.

Yield: 3.26%

Dividend Amount: 30 cents

Ex-Dividend Date: Nov. 13

Beta: 2.22

Strategy: Buy stock and offer to sell the November $33.00 strike or lower call for 45 cents over the intrinsic value.

I will attempt to close out the trade with a gain of near 13 cents, plus dividend. Call options offer some protection from possible adverse moves in the stock price and provide offset revenue when the options do not fully cover down moves in the stock. Income is welcomed, but not needed from option premiums, so a break even from option premiums received/stock losses ratio is a win.

I don't want the option hedge unless the sale will provide at least the minimum 45 cents over intrinsic value. If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 45 cents. The most I can make is 75 cents if I hold the covered call through option expiration day and the stock gets called away.

IP Payout Ratio TTM Chart IP Payout Ratio TTM data by YCharts
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EXC $30.82 -0.19%
GLW $17.52 -2.50%
IP $43.25 5.30%
LLY $86.17 2.90%
UTX $95.39 1.10%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,013.43 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

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