How we use options to enhance yield
One of the key components in the Company’s ability to pay a high yield is its approach to selling options over part of its investment and trading portfolio. This generates current income from the option premium Djerriwarrh receives for selling the options. In undertaking this activity the Company may give up some capital growth as options are exercised, although Djerriwarrh will seek to buy back options when it is financially attractive to do so to minimise the sales of shares through the exercise of call options.
The chart below highlights the relative yield on Djerriwarrh shares and net tangible assets in comparison to cash rates and S&P/ASX 50 Leaders Index since listing. It should be noted these yields do not take into account the franking benefits available to investors.
Dividend Yield vs Market Yield