MDY Dividend Type Payments

SPDR S&P MID-CAP 400 dividend

Although MDY has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR S&P MID-CAP 400 to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 4:16 PM ET):

SPDR S&P MID-CAP 400 (MDY)
Bid Ask Last Change Volume P/E Market Cap
334.56 336.99 335.57 -3.43 1.6M - 205B

MDY Dividend-Like Income Using Covered Calls

With MDY at 335.57, 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% 10.07 2.8
5% 16.78 4.6
10% 33.56 9.2

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 MDY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 342.50 0.35 4 8.8 5.51 (1.6%)
Nov 2 347.50 0.50 11 4.5 10.51 (3.1%)
5% Yield On MDY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 342.50 0.35 4 8.8 5.51 (1.6%)
Nov 2 345.00 1.00 11 9.1 8.01 (2.4%)
10% Yield On MDY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 26 340.00 1.05 4 26.3 3.01 (0.9%)
Nov 2 342.50 1.55 11 14.1 5.51 (1.6%)

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