XLF Dividend Type Payments

Although XLF has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on FINANCIAL SELECT SECTOR SPDR 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):

FINANCIAL SELECT SECTOR SPDR (XLF)
Bid Ask Last Change Volume P/E Market Cap
26.79 26.80 26.78 -0.01 64.5M - 296B

XLF Dividend-Like Income Using Covered Calls

With XLF at 26.78, 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% 0.80 0.2
5% 1.34 0.4
10% 2.68 0.7

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 XLF Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 27.00 0.12 5 2.4 0.20 (0.7%)
Nov 30 28.00 0.03 12 0.3 1.20 (4.5%)
5% Yield On XLF Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 27.00 0.12 5 2.4 0.20 (0.7%)
Nov 30 27.50 0.10 12 0.8 0.70 (2.6%)
10% Yield On XLF Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 27.00 0.12 5 2.4 0.20 (0.7%)
Nov 30 27.50 0.10 12 0.8 0.70 (2.6%)

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Want more examples? XLE Dividend | XLG Dividend