XLK Dividend Type Payments
Although XLK has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Technology 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):
| SPDR Select Sector Fund - Technology (XLK) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 271.54 |
272.20 |
271.43 |
-0.94 |
9.4M |
- |
101B |
XLK Dividend-Like Income Using Covered Calls
With XLK at 271.43, 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% |
8.14 |
2.2 |
| 5% |
13.57 |
3.7 |
| 10% |
27.14 |
7.4 |
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 XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Oct 3 |
272.50 |
2.62 |
17 |
15.4 |
0.30 (0.1%) |
| Oct 10 |
272.50 |
2.83 |
24 |
11.8 |
0.30 (0.1%) |
| 5% Yield On XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Oct 3 |
272.50 |
2.62 |
17 |
15.4 |
0.30 (0.1%) |
| Oct 10 |
272.50 |
2.83 |
24 |
11.8 |
0.30 (0.1%) |
| 10% Yield On XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Oct 3 |
272.50 |
2.62 |
17 |
15.4 |
0.30 (0.1%) |
| Oct 10 |
272.50 |
2.83 |
24 |
11.8 |
0.30 (0.1%) |
Want to increase dividends with covered calls? Sign Up For A Free Trial
