XLE Dividend Type Payments
Although XLE has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Energy Select Sector 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):
| SPDR Select Sector Fund - Energy Select Sector (XLE) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 88.20 |
88.24 |
88.10 |
+1.51 |
41.9M |
- |
8.2B |
XLE Dividend-Like Income Using Covered Calls
With XLE at 88.10, 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% |
2.64 |
0.7 |
| 5% |
4.41 |
1.2 |
| 10% |
8.81 |
2.4 |
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 XLE Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jul 3 |
88.00 |
2.09 |
21 |
8.8 |
0.00 (0.0%) |
| Jul 11 |
88.50 |
1.67 |
29 |
5.8 |
0.26 (0.3%) |
| 5% Yield On XLE Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jul 3 |
88.00 |
2.09 |
21 |
8.8 |
0.00 (0.0%) |
| Jul 11 |
88.50 |
1.67 |
29 |
5.8 |
0.26 (0.3%) |
| 10% Yield On XLE Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jul 3 |
88.00 |
2.09 |
21 |
8.8 |
0.00 (0.0%) |
| Jul 11 |
88.50 |
1.67 |
29 |
5.8 |
0.26 (0.3%) |
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