Always important when discussing dividends is the fact that, in general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Walt Disney Co. , looking at the dividend history chart for DIS below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 1% annualized dividend yield.
Turning to the other side of the option chain, we highlight one call contract of particular interest for the June expiration, for shareholders of Walt Disney Co. (DIS) looking to boost their income beyond the stock's 1% annualized dividend yield. Selling the covered call at the $85 strike and collecting the premium based on the $1.16 bid, annualizes to an additional 11.1% rate of return against the current stock price (this is what we at Stock Options Channel refer to as the YieldBoost), for a total of 12.2% annualized rate in the scenario where the stock is not called away. Any upside above $85 would be lost if the stock rises there and is called away, but DIS shares would have to climb 2.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 4.2% return from this trading level, in addition to any dividends collected before the stock was called.
The chart below shows the trailing twelve month trading history for Walt Disney Co. , highlighting in green where the $80 strike is located relative to that history, and highlighting the $85 strike in red:
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts