How To YieldBoost SBA Communications To 9.9% Using Options
September 12, 2024 at 11:36 AM EDT
Shareholders of SBA Communications Corp (SBAC) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the March 2025 covered call at the $260 strike and collect the premium based on the $10.30 bid, which annualizes to an additional 8.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.9% annualized rate in the scenario where the stock is not called away. Any upside above $260 would be lost if the stock rises there and is called away, but SBAC shares would have to climb 9.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 13.4% return from this trading level, in addition to any dividends collected before the stock was called.