Maximizing Income with Kimco Realty’s Covered Call Strategy

Shareholders of Kimco Realty Corp (Symbol: KIM) looking to enhance their income beyond the stock’s 4.8% annualized dividend yield have a strategy at their disposal. By selling the October covered call at the $22.50 strike price, investors can collect a premium based on a 60 cents bid. This premium translates to an additional 6.6% annualized return when measured against the current stock price. Overall, this could yield a total annualized return of 11.4% if the stock is not called away. Should the stock rise above $22.50, the investor would lose any upside beyond this strike price. However, since KIM shares would need to increase by 6.4% from current levels for this to occur, shareholders could still enjoy a competitive 9.3% return from the trading level, in addition to any dividends received before the stock is called.

Dividend amounts are not always guaranteed. They frequently fluctuate based on a company’s profitability. For Kimco Realty Corp, examining the dividend history chart can provide insight into the sustainability of the recent dividend and the potential for maintaining the 4.8% yield.

A trailing twelve-month trading history chart for KIM is shown below, highlighting the $22.50 strike price in red:

This chart and KIM’s historical volatility provide valuable information when determining whether selling the October covered call at the $22.50 strike price offers a worthwhile reward for the risk of potentially losing upside beyond that level. The trailing twelve-month volatility for Kimco Realty Corp, based on the last 250 trading days, is calculated at 24%. For additional call options contract ideas with various expiration dates, interested investors can visit the KIM stock options page.

In mid-afternoon trading on Wednesday, put volume among S&P 500 components reached 1.13 million contracts, while call volume hit 2.91 million, resulting in a put:call ratio of 0.39 for the day. This ratio indicates very high call volume relative to puts, suggesting a clear preference for calls among options traders at this time.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.