PSXP Dividend Type Payments

PHILLIPS 66 PARTNERS LP dividend

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

PHILLIPS 66 PARTNERS LP (PSXP)
Bid Ask Last Change Volume P/E Market Cap
50.57 52.16 51.21 -0.13 184K 16 6.4B

PSXP Dividend-Like Income Using Covered Calls

With PSXP at 51.21, 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% 1.54 0.4
5% 2.56 0.7
10% 5.12 1.4

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 PSXP Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 55.00 0.35 68 0.5 2.84 (5.5%)
Mar 15 55.00 0.90 152 0.6 2.84 (5.5%)

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