Strategy To YieldBoost KIM From 4% To 20.9% Using Options

Shareholders of Kimco Realty Corp (KIM) looking to boost their income beyond the stock's 4% annualized dividend yield can sell the January 2025 covered call at the $25 strike and collect the premium based on the 75 cents bid, which annualizes to an additional 16.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20.9% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but KIM shares would have to advance 0.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 3.5% return from this trading level, in addition to any dividends collected before the stock was called.