PSX Dividend Type Payments

Phillips 66 dividend

Although PSX has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Phillips 66 to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 4:16 PM ET):

Phillips 66 (PSX)
Bid Ask Last Change Volume P/E Market Cap
95.25 96.70 95.98 -2.57 1.8M 8.4 45B

PSX Dividend-Like Income Using Covered Calls

With PSX at 95.98, 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% 2.88 0.8
5% 4.80 1.3
10% 9.60 2.6

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 PSX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 29 100.00 0.10 8 1.3 3.30 (3.4%)
Apr 5 101.00 0.15 15 1.0 4.30 (4.5%)
5% Yield On PSX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 29 99.50 0.15 8 1.9 2.80 (2.9%)
Apr 5 100.00 0.30 15 2.0 3.30 (3.4%)
10% Yield On PSX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 29 98.50 0.30 8 3.8 1.80 (1.9%)
Apr 5 99.50 0.40 15 2.7 2.80 (2.9%)

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Want more examples? PSTI Dividend | PSXP Dividend