Shareholders of AZZ Inc (AZZ) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the February 2014 covered call at the $40 strike and collect the premium based on the $1.95 bid, which annualizes to an additional 8.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.9% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but AZZ shares would have to advance 9.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 14.9% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost AZZ From 1.5% To 9.9%
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