Financial News

How To YieldBoost Broadridge Financial Solutions To 9.7% Using Options

Shareholders of Broadridge Financial Solutions (BR) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the December covered call at the $210 strike and collect the premium based on the $12.30 bid, which annualizes to an additional 8.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.7% annualized rate in the scenario where the stock is not called away. Any upside above $210 would be lost if the stock rises there and is called away, but BR shares would have to climb 5.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 11.5% return from this trading level, in addition to any dividends collected before the stock was called.
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