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Best Dividend Stocks for Covered Calls 2026
Ten dividend payers to own and write calls against, ranked on dividend record first, then options liquidity and premium. Every pick shows what a 25-delta call 30 days out pays today, the dividend yield, the two combined and the next ex-dividend date, refreshed from live options data.
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The short answer
The best dividend stocks for covered calls have a long record of paying and raising their dividend, liquid options and a share price you can afford in 100-share lots. On this list that means KO, JNJ and PEP for dividend record, XOM and JPM for richer premium or deeper options, and VZ, MO and O for higher dividend yields.
You only collect the dividend if you still own the shares on the ex-dividend date, so watch any call that goes in the money just before it.
ApexVol ranks dividend covered call stocks on dividend record first, then options liquidity, then premium. Each pick's call yield is a 25-delta call 30 days out, priced from that stock's own measured call volatility, shown with the dividend yield and the two combined.
Ranked at a glance
10 picks,
in order.
Ranked on dividend record first, then options liquidity, then premium. A rich call or a high yield on a company that may cut its dividend is a bad trade, so the highest yields do not top the list. Each pick shows today's 25-delta call yield, dividend yield and cash for 100 shares.
| Rank | Name | Key stat | Description |
|---|---|---|---|
| 1 | KO (Coca-Cola) | IV percentile 33 (IV 21.2%) | The default dividend name for covered calls: more than 60 years of dividend raises in a row, liquid options and a low share price. Calls pay a modest premium because the stock moves slowly. |
| 2 | JNJ (Johnson & Johnson) | IV percentile 94 (IV 25.3%) | More than 60 years of dividend raises and a strong balance sheet. Healthcare news and lawsuit headlines lift its implied volatility from time to time, which makes the calls pay more. |
| 3 | PEP (PepsiCo) | IV percentile 46 (IV 20.7%) | More than 50 years of dividend raises, with a higher dividend yield than KO at the moment and a similar slow-moving stock. |
| 4 | XOM (Exxon Mobil) | IV percentile 42 (IV 30.1%) | More than 40 years of dividend raises. Oil prices make the stock move more than the staples, so its calls pay more, with more chance of being called away. |
| 5 | JPM (JPMorgan Chase) | IV percentile 22 (IV 21.2%) | The largest US bank, with some of the most traded options of any dividend stock. It cut its dividend in 2009 and has raised it many times since. The dividend yield is lower than most picks here. |
| 6 | MO (Altria Group) | IV percentile 44 (IV 26.8%) | One of the highest dividend yields among large US companies, with more than 50 years of raises. The trade-off is a tobacco business whose sales volumes keep shrinking. |
| 7 | O (Realty Income) | IV percentile 89 (IV 19.6%) | A property company that pays its dividend every month and has raised it for more than 25 years. The stock moves slowly and its options are the thinnest on this list, so check the bid-ask spread before you sell. |
| 8 | VZ (Verizon) | IV percentile 87 (IV 24.5%) | One of the highest dividend yields on this list for a low share price, and the dividend has been raised for about 20 years in a row. Most of the income here comes from the dividend, not the call. |
| 9 | BAC (Bank of America) | IV percentile 63 (IV 23.9%) | The most traded options on this list and a low share price. Like JPM it cut its dividend in 2009 and has raised it since, so the record is shorter than the staples above. |
| 10 | T (AT&T) | IV percentile 88 (IV 27.4%) | The cheapest lot on this list. AT&T cut its dividend in 2022 when it spun off WarnerMedia and has held it flat since, so it ranks last on dividend record despite a solid yield. |
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KO (Coca-Cola) Top pick
The default dividend name for covered calls: more than 60 years of dividend raises in a row, liquid options and a low share price. Calls pay a modest premium because the stock moves slowly.
IV percentile 33 (IV 21.2%), measured 2026-10-26
25-delta call yield 0.84% for 30 days, 10.2% a year (estimated): own 100 shares at $92.71, sell the $97 call for $0.78
With the dividend 12.5% a year: the call's 10.2% plus a 2.3% dividend yield
Next ex-dividend date December 1, 2026 (expected)
Risk level Low
Capital required $9,300 per 100 shares
Ideal for Conservative investors starting with dividend covered calls
Pros More than 60 years of dividend raises; Low cash per 100 shares; Liquid options with weekly expirations
Cons Low IV means a smaller call premium; Slow growth; Calls cap the upside on a rare rally
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JNJ (Johnson & Johnson)
More than 60 years of dividend raises and a strong balance sheet. Healthcare news and lawsuit headlines lift its implied volatility from time to time, which makes the calls pay more.
IV percentile 94 (IV 25.3%), measured 2026-10-26
25-delta call yield 0.88% for 30 days, 10.7% a year (estimated): own 100 shares at $263.81, sell the $280 call for $2.33
With the dividend 12.7% a year: the call's 10.7% plus a 2.0% dividend yield
Next ex-dividend date November 24, 2026 (expected)
Risk level Low
Capital required $26,400 per 100 shares
Ideal for Income investors who want a defensive core holding
Pros More than 60 years of dividend raises; Defensive healthcare business; Call premium rises around news
Cons Lawsuit headlines add event risk; One of the costlier lots on this list; Thinner options volume than KO or XOM
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PEP (PepsiCo)
More than 50 years of dividend raises, with a higher dividend yield than KO at the moment and a similar slow-moving stock.
IV percentile 46 (IV 20.7%), measured 2026-10-26
25-delta call yield 0.94% for 30 days, 11.5% a year (estimated): own 100 shares at $135.77, sell the $141 call for $1.28
With the dividend 15.9% a year: the call's 11.5% plus a 4.4% dividend yield
Next ex-dividend date December 7, 2026 (expected)
Risk level Low
Capital required $13,600 per 100 shares
Ideal for Investors who want a staple with a bigger dividend
Pros More than 50 years of dividend raises; Dividend yield above KO's right now; Liquid options
Cons Low IV means a modest call premium; Higher cash per 100 shares than KO; Slow growth
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XOM (Exxon Mobil)
More than 40 years of dividend raises. Oil prices make the stock move more than the staples, so its calls pay more, with more chance of being called away.
IV percentile 42 (IV 30.1%), measured 2026-10-26
25-delta call yield 1.26% for 30 days, 15.3% a year (estimated): own 100 shares at $183.21, sell the $195 call for $2.30
With the dividend 17.5% a year: the call's 15.3% plus a 2.2% dividend yield
Next ex-dividend date November 16, 2026 (expected)
Risk level Medium
Capital required $18,300 per 100 shares
Ideal for Investors comfortable with energy exposure
Pros More than 40 years of dividend raises; Richer call premium than the staples; Deep, liquid options
Cons Moves with the oil price; Profits swing with the energy cycle; Mid-range cash per 100 shares
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JPM (JPMorgan Chase)
The largest US bank, with some of the most traded options of any dividend stock. It cut its dividend in 2009 and has raised it many times since. The dividend yield is lower than most picks here.
IV percentile 22 (IV 21.2%), measured 2026-10-26
25-delta call yield 0.9% for 30 days, 11.0% a year (estimated): own 100 shares at $331.58, sell the $345 call for $3.00
With the dividend 13.0% a year: the call's 11.0% plus a 2.0% dividend yield
Next ex-dividend date January 6, 2027 (expected)
Risk level Low-Medium
Capital required $33,200 per 100 shares
Ideal for Larger accounts wanting a bank in the income mix
Pros Very liquid options; Dividend rebuilt and growing since 2009; Quality business you can hold
Cons Lower dividend yield than the staples; Highest cash per 100 shares on this list; Moves with rates and credit worries
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MO (Altria Group)
One of the highest dividend yields among large US companies, with more than 50 years of raises. The trade-off is a tobacco business whose sales volumes keep shrinking.
IV percentile 44 (IV 26.8%), measured 2026-10-26
25-delta call yield 1.21% for 30 days, 14.7% a year (estimated): own 100 shares at $74.31, sell the $78 call for $0.90
With the dividend 20.7% a year: the call's 14.7% plus a 6.0% dividend yield
Next ex-dividend date December 28, 2026 (expected)
Risk level Low-Medium
Capital required $7,400 per 100 shares
Ideal for Yield-first investors comfortable owning tobacco
Pros High dividend yield; More than 50 years of dividend raises; Low cash per 100 shares
Cons Shrinking tobacco volumes; Thinner options volume than most picks; Some funds will not hold tobacco
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O (Realty Income)
A property company that pays its dividend every month and has raised it for more than 25 years. The stock moves slowly and its options are the thinnest on this list, so check the bid-ask spread before you sell.
IV percentile 89 (IV 19.6%), measured 2026-10-26
25-delta call yield 0.77% for 30 days, 9.4% a year (estimated): own 100 shares at $56.89, sell the $59 call for $0.44
With the dividend 15.1% a year: the call's 9.4% plus a 5.7% dividend yield
Next ex-dividend date October 30, 2026 (expected)
Risk level Low
Capital required $5,700 per 100 shares
Ideal for Investors who want monthly income
Pros Dividend paid monthly; More than 25 years of dividend raises; Low cash per 100 shares
Cons Thinnest options on this list; Low IV means a small call premium; Sensitive to interest rates
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VZ (Verizon)
One of the highest dividend yields on this list for a low share price, and the dividend has been raised for about 20 years in a row. Most of the income here comes from the dividend, not the call.
IV percentile 87 (IV 24.5%), measured 2026-10-26
25-delta call yield 0.92% for 30 days, 11.2% a year (estimated): own 100 shares at $44.66, sell the $47 call for $0.41
With the dividend 17.8% a year: the call's 11.2% plus a 6.6% dividend yield
Next ex-dividend date January 12, 2027 (expected)
Risk level Low-Medium
Capital required $4,500 per 100 shares
Ideal for Yield-focused investors with smaller accounts
Pros One of the highest dividend yields here; Low cash per 100 shares; Liquid options
Cons Heavy debt load; Little growth; Smaller call premium than energy or banks
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BAC (Bank of America)
The most traded options on this list and a low share price. Like JPM it cut its dividend in 2009 and has raised it since, so the record is shorter than the staples above.
IV percentile 63 (IV 23.9%), measured 2026-10-26
25-delta call yield 0.99% for 30 days, 12.0% a year (estimated): own 100 shares at $50.56, sell the $53 call for $0.50
With the dividend 14.5% a year: the call's 12.0% plus a 2.5% dividend yield
Next ex-dividend date December 4, 2026 (expected)
Risk level Low-Medium
Capital required $5,100 per 100 shares
Ideal for Smaller accounts that want deep options markets
Pros Most traded options on this list; Low cash per 100 shares; Growing dividend
Cons Shorter dividend record than the staples; Moves with rates and credit worries; Lower dividend yield than VZ or MO
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T (AT&T)
The cheapest lot on this list. AT&T cut its dividend in 2022 when it spun off WarnerMedia and has held it flat since, so it ranks last on dividend record despite a solid yield.
IV percentile 88 (IV 27.4%), measured 2026-10-26
25-delta call yield 1.15% for 30 days, 14.0% a year (estimated): own 100 shares at $20.93, sell the $22 call for $0.24
With the dividend 19.3% a year: the call's 14.0% plus a 5.3% dividend yield
Next ex-dividend date January 12, 2027 (expected)
Risk level Medium
Capital required $2,100 per 100 shares
Ideal for Small accounts trying dividend covered calls for the first time
Pros Lowest cash per 100 shares on this list; Solid dividend yield; Liquid options
Cons Dividend cut in 2022; Dividend held flat since; Heavy debt load
Live data, refreshed October 27, 2026. October 2026 data refresh: KO IV percentile 41→33, XOM IV percentile 59→42, MO IV percentile 72→44, VZ IV percentile 93→87, T IV percentile 93→88.
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Highest dividend + covered call yields today (30 days, 25-delta)
Live, as of 27 Oct 2026, 16:27 UTCThe ranking above weighs how dependable the dividend is. This screen is yield alone: liquid US dividend payers ranked by a 25-delta call's yearly premium plus the dividend. Check a name's payout history before you buy.
| Ticker | Price | Div yield | Call yield/yr | Combined | IV30 |
|---|---|---|---|---|---|
| DKS | $144.48 | 3.5% | 23.8% | 27.3% | 49.4% |
| M | $23.59 | 3.2% | 23.9% | 27.1% | 47.6% |
| AEO | $18.81 | 2.6% | 24.1% | 26.7% | 49.4% |
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How to Pick Dividend Stocks for Covered Calls
A dividend covered call has two sources of income: the dividend the company pays and the premium you collect for selling a call against your 100 shares. The dividend is the steady part, so the stock and its payout record come first.
The Checklist
- A long dividend record. Years of raises, ideally through a recession. A company that has cut before can cut again.
- A yield that is not too good to be true. A very high yield often means the share price has fallen because the market expects a cut.
- Liquid options. A bid-ask spread of a few cents near your strike, so the fill does not eat the premium.
- Know the ex-dividend date. You only get the dividend if you still own the shares on that date.
- Know the earnings date. A call that spans a report pays more because the stock can jump through your strike.
How Dividends and Call Premium Add Up
Each pick above shows what one call pays today (a 25-delta call 30 days out, usually 3% to 7% above the share price on these names), the dividend yield, and the two added together for a year.
An illustration with round numbers: a $100 stock paying a 3% dividend, and a 30-day call that sells for $1.00. The call pays 1% for 30 days, or about 12% a year if you could repeat it every month. Add the 3% dividend and the combined figure is about 15% a year.
Treat that as a ceiling. It assumes the same premium every month, no assignment and no fall in the stock. The dividend is not extra money on top of the share price either: the stock usually drops by about the dividend on the ex-dividend date, and option prices already allow for that.
Ex-Dividend Dates and Early Assignment
The person who bought your call can exercise it early, before expiry, to own the shares in time for the dividend. That only makes sense for them when the call is in the money and the time value left in it is less than the dividend.
A worked example: the stock trades at $185 and you sold the $180 call. The call is worth $5.30, so $0.30 of it is time value. A $0.50 dividend is due tomorrow. The call owner exercises today, takes your shares at $180 and collects the dividend instead of you.
To avoid it, watch any call that is in the money in the days before the ex-dividend date, and roll it up and out if you want to keep the shares. A 25-delta call starts well out of the money, so this only matters after the stock has rallied. See early assignment.
Dividend Covered Calls by Account Size
A covered call needs 100 shares, so the share price decides what you can write against. Check the cash needed on each pick above before you plan a trade.
Under $10,000
T, VZ, BAC, O, MO and KO each need less than $10,000 for 100 shares.
$10,000 to $20,000
PEP and XOM.
Over $20,000
JNJ and JPM. With less cash, a poor man's covered call swaps the shares for a long-dated call, but you give up the dividend.
Dividend Stocks and Earnings
These are slower stocks than the tech names on most covered call lists, but they still move on earnings, and a call that spans the report pays more for that reason. Check the date and the move options are pricing before you sell: KO, JNJ, PEP, XOM, JPM, MO, VZ, BAC, T. The earnings expected moves this week page lists every report coming up.
More premium, less dividend? The main list of the best covered call stocks for 2026 ranks 10 picks, including the mega-cap tech names, on quality and live call yield.
Run the numbers before you trade. Premium income, breakeven & return if assigned. Free, no signup. Or model any multi-leg trade in the options profit calculator.
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Reviewed for technical accuracy. 10+ years trading options; built ApexVol's pricing engine, Greeks model and IV-rank methodology.
Revised as market conditions and institutional data change. Last revised 2026-10-27. How we research →
Questions
About this ranking.
What are the best dividend stocks for covered calls?
Companies with a long record of paying and raising their dividend, liquid options and a stock you would hold through a downturn. On this list: KO, JNJ and PEP for the longest dividend records, XOM and JPM for richer premium or deeper options, MO, O and VZ for higher dividend yields, and BAC and T for smaller accounts.
How much do covered calls add to a dividend stock's yield?
On these names a 25-delta call 30 days out usually pays somewhere around 0.5% to 1.2% of the share price, depending on how much the stock is moving. Repeated every month that is roughly 6% to 14% a year on top of the dividend, but only if you never get called away and the stock does not fall. Each pick shows today's figure.
Do I keep the dividend if I sell a covered call?
Yes, as long as you still own the shares on the ex-dividend date. The risk is early assignment: if your call is in the money just before that date and has little time value left, the call owner may exercise it to collect the dividend themselves.
Should I sell covered calls before the ex-dividend date?
You can, but watch any call that goes in the money in the days before it. An out-of-the-money call is rarely exercised early. If the stock has rallied through your strike, roll the call up and out before the ex-dividend date if you want to keep the shares and the dividend.
Will covered calls cap a dividend stock's upside?
Yes. If the stock is above your strike at expiry, your shares are sold at the strike and you miss the rest of the move, though you keep the premium and any dividends already paid. On slow-moving dividend stocks this happens less often than on tech names, which is part of the appeal.
Are dividend stocks or growth stocks better for covered calls?
Dividend stocks usually move less, so their calls pay less, but the dividend adds steady income and the shares are called away less often. Growth stocks pay more premium for the same delta, with bigger swings and no dividend. Many income investors use both.
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