Analog Devices Targets 5.1% Yield with Covered Call Strategy

Analog Devices Inc offers a covered call strategy presenting a 5.1% yield opportunity. Shareholders can sell a covered call at the $280 strike, supplementing their income beyond the 1.8% dividend yield.

Date: 11-02-2025

AI Rating: 7

Earnings and Returns: The report reveals that shareholders can earn a total annualized rate of 5.1% by utilizing a covered call strategy. This includes a 1.8% annualized dividend yield and a premium from selling the call option.

Dividend Stability: The dividend history suggests unpredictability based on profitability trends, yet the current yield remains a point of interest for income-focused investors.

Additional Returns: If ADI shares advance beyond $280, which represents a 36.5% increase, shareholders would see a substantial return. This return alongside dividends could equate to a significant 42.9% gain, enhancing attractiveness for potential investors.

Market Sentiment: The report notes that current market trends are favoring calls over puts, with a put:call ratio of 0.55. This indicates a bullish sentiment among investors regarding ADI's prospects.

Stocks: ADI