How To YieldBoost B&G Foods From 5.4% To 26.5% Using Options

Shareholders of B&G Foods Inc (BGS) looking to boost their income beyond the stock's 5.4% annualized dividend yield can sell the May covered call at the $40 strike and collect the premium based on the $2.40 bid, which annualizes to an additional 21.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 26.5% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but BGS shares would have to climb 10.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 17.4% return from this trading level, in addition to any dividends collected before the stock was called.