Conagra Brands Offers Strong Income Potential for Shareholders
Shareholders of Conagra Brands Inc (Symbol: CAG) seeking to enhance their income may consider selling September covered calls at the $28 strike. By doing so, they can collect a premium of 75 cents, which translates into an annualized return of about 5.5% based on the current stock price. This approach, known as YieldBoost in the options trading community, could yield a total annualized return of 11% if the stock price does not exceed $28. However, investors should note that any price appreciation over $28 will result in the stock being called away. This means CAG shares would need to increase by 11% from current levels for this scenario to play out. In the event that the stock is called, shareholders would still realize a total return of 13.9%, factoring in any dividends received before the stock was called away.
Dividend payouts can be unpredictable and often depend on a company’s profitability fluctuations. For Conagra Brands Inc, a review of the dividend history chart provided below can aid investors in assessing the likelihood of maintaining the recent 5.5% annualized dividend yield.
The following chart displays CAG’s trailing twelve-month trading history, marking the $28 strike in red:
The historical price chart and the stock’s volatility provide useful insights for shareholders to evaluate whether selling covered calls at the $28 strike presents a favorable risk-reward scenario. According to our calculations, Conagra Brands Inc has a trailing twelve-month volatility of 23%, derived from the last 250 trading days and the current stock price of $25.26. For additional call option opportunities at various expiration dates, investors can visit the CAG options page on StockOptionsChannel.com.
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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.
