YieldBoost DigitalBridge Group From 0.3% To 12.2% Using Options
June 17, 2024 at 11:40 AM EDT
Shareholders of DigitalBridge Group Inc (DBRG) looking to boost their income beyond the stock's 0.3% annualized dividend yield can sell the December covered call at the $15 strike and collect the premium based on the 75 cents 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 12.2% annualized rate in the scenario where the stock is not called away. Any upside above $15 would be lost if the stock rises there and is called away, but DBRG shares would have to climb 20.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 26.7% return from this trading level, in addition to any dividends collected before the stock was called.
