Strategy To YieldBoost DTE Energy To 8.1% Using Options

Shareholders of DTE Energy Co (DTE) looking to boost their income beyond the stock's 3.6% annualized dividend yield can sell the January 2025 covered call at the $120 strike and collect the premium based on the $2.95 bid, which annualizes to an additional 4.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.1% annualized rate in the scenario where the stock is not called away. Any upside above $120 would be lost if the stock rises there and is called away, but DTE shares would have to advance 7.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.9% return from this trading level, in addition to any dividends collected before the stock was called.