FDN Dividend Type Payments

Although FDN has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on First Trust DJ Internet Index Fund to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):

First Trust DJ Internet Index Fund (FDN)
Bid Ask Last Change Volume P/E Market Cap
124.50 125.69 125.00 +2.14 1.1M - 0.0B

FDN Dividend-Like Income Using Covered Calls

With FDN at 125.00, here's a table showing how big the annual "dividend" (ie. total annual call premium received) would need to be to attain 3%, 5%, and 10% annual yields. Also shown is the equivalent number of cents/day necessary to achieve each yield:

Annual Yield Annual Premium Cents/Day
3% 3.75 1.0
5% 6.25 1.7
10% 12.50 3.4

So now we need to find out of the money covered calls that pay at least the prescribed cents/day amount of time premium. That will generate income and, because they are out of the money, leave room for some upside potential on the stock. Here are some examples:

3% Yield On FDN Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 132.00 0.30 10 3.0 6.31 (5.0%)
Jan 18 139.00 0.45 38 1.2 13.31 (10.6%)
5% Yield On FDN Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 132.00 0.30 10 3.0 6.31 (5.0%)
Jan 18 136.00 0.75 38 2.0 10.31 (8.2%)
10% Yield On FDN Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 131.00 0.45 10 4.5 5.31 (4.2%)
Jan 18 133.00 1.45 38 3.8 7.31 (5.8%)

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Top 10 Open Interest For Dec 21 Expiration     Top 5 High Yield
1.SPY dividend 6.IWM dividend   1. dividend
2.EEM dividend 7.FXI dividend   2. dividend
3.SPX dividend 8.GE dividend   3. dividend
4.QQQ dividend 9.VXX dividend   4. dividend
5.EWZ dividend 10.BAC dividend   5. dividend

Want more examples? FDM Dividend | FDP Dividend