XHB Dividend Type Payments
Although XHB has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on State Street SPDR S&P Homebuilders ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):
| State Street SPDR S&P Homebuilders ETF (XHB) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 104.75 |
106.37 |
105.61 |
-1.05 |
2.1M |
- |
5.7B |
XHB Dividend-Like Income Using Covered Calls
With XHB at 105.61, 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% |
3.17 |
0.9 |
| 5% |
5.28 |
1.4 |
| 10% |
10.56 |
2.9 |
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 XHB Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 19 |
110.00 |
0.05 |
3 |
1.7 |
3.63 (3.4%) |
| Dec 26 |
108.00 |
0.40 |
10 |
4.0 |
1.63 (1.5%) |
| 5% Yield On XHB Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 19 |
110.00 |
0.05 |
3 |
1.7 |
3.63 (3.4%) |
| Dec 26 |
108.00 |
0.40 |
10 |
4.0 |
1.63 (1.5%) |
| 10% Yield On XHB Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 26 |
108.00 |
0.40 |
10 |
4.0 |
1.63 (1.5%) |
| Jan 2 |
110.00 |
0.57 |
17 |
3.4 |
3.63 (3.4%) |
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