PPA Dividend Type Payments
Although PPA has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Invesco Aerospace & Defense ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 11:35 AM ET):
| Invesco Aerospace & Defense ETF (PPA) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 99.20 |
99.21 |
99.19 |
-0.59 |
229K |
- |
1.4B |
PPA Dividend-Like Income Using Covered Calls
With PPA at 99.19, here's a table showing how big the annual "dividend" (i.e. 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% |
2.98 |
0.8 |
| 5% |
4.96 |
1.4 |
| 10% |
9.92 |
2.7 |
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 PPA Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 17 |
99.00 |
0.65 |
23 |
1.9 |
0.00 (0.0%) |
| Jun 21 |
100.00 |
1.80 |
58 |
3.1 |
0.79 (0.8%) |
| 5% Yield On PPA Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 17 |
99.00 |
0.65 |
23 |
1.9 |
0.00 (0.0%) |
| Jun 21 |
100.00 |
1.80 |
58 |
3.1 |
0.79 (0.8%) |
| 10% Yield On PPA Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jun 21 |
100.00 |
1.80 |
58 |
3.1 |
0.79 (0.8%) |
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