YieldBoost Equifax From 0.6% To 12.4% Using Options
June 12, 2024 at 11:33 AM EDT
Shareholders of Equifax Inc (EFX) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the December covered call at the $270 strike and collect the premium based on the $15.20 bid, which annualizes to an additional 11.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.4% annualized rate in the scenario where the stock is not called away. Any upside above $270 would be lost if the stock rises there and is called away, but EFX shares would have to climb 9.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 15.4% return from this trading level, in addition to any dividends collected before the stock was called.