SDY Dividend Type Payments
Although SDY has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR S&P Dividend ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 4:16 PM ET):
| SPDR S&P Dividend ETF (SDY) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 94.16 |
94.75 |
94.44 |
-0.10 |
539K |
- |
0.0B |
SDY Dividend-Like Income Using Covered Calls
With SDY at 94.44, 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% |
2.83 |
0.8 |
| 5% |
4.72 |
1.3 |
| 10% |
9.44 |
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 SDY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 21 |
96.00 |
0.20 |
9 |
2.2 |
1.25 (1.3%) |
| Jan 18 |
97.00 |
0.40 |
37 |
1.1 |
2.25 (2.4%) |
| 5% Yield On SDY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 21 |
96.00 |
0.20 |
9 |
2.2 |
1.25 (1.3%) |
| Jan 18 |
96.00 |
0.85 |
37 |
2.3 |
1.25 (1.3%) |
| 10% Yield On SDY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 21 |
95.00 |
0.45 |
9 |
5.0 |
0.25 (0.3%) |
| Jan 18 |
95.00 |
1.30 |
37 |
3.5 |
0.25 (0.3%) |
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