YieldBoost DHR To 4.8% Using Options

Shareholders of Danaher Corp (DHR) looking to boost their income beyond the stock's 0.7% annualized dividend yield can sell the January 2018 covered call at the $90 strike and collect the premium based on the $2.05 bid, which annualizes to an additional 4.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.8% annualized rate in the scenario where the stock is not called away. Any upside above $90 would be lost if the stock rises there and is called away, but DHR shares would have to advance 4.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 7.1% return from this trading level, in addition to any dividends collected before the stock was called.