How To YieldBoost Diversified Healthcare Trust To 20.4% Using Options

Shareholders of Diversified Healthcare Trust (DHC) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the June 2025 covered call at the $2.50 strike and collect the premium based on the 20 cents bid, which annualizes to an additional 18.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20.4% annualized rate in the scenario where the stock is not called away. Any upside above $2.50 would be lost if the stock rises there and is called away, but DHC shares would have to advance 13.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 22.2% return from this trading level, in addition to any dividends collected before the stock was called.