YieldBoost SMG To 7.7% Using Options

Shareholders of Scotts Miracle-Gro Co (SMG) looking to boost their income beyond the stock's 3.5% annualized dividend yield can sell the January 2027 covered call at the $105 strike and collect the premium based on the $7.30 bid, which annualizes to an additional 4.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.7% annualized rate in the scenario where the stock is not called away. Any upside above $105 would be lost if the stock rises there and is called away, but SMG shares would have to advance 38.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 48.5% return from this trading level, in addition to any dividends collected before the stock was called.