XLK Dividend Type Payments

Although XLK has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on TECH 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 Fri 4:16 PM ET):

TECH SELECT SECTOR SPDR (XLK)
Bid Ask Last Change Volume P/E Market Cap
72.91 73.43 73.15 +0.11 9.0M - 216B

XLK Dividend-Like Income Using Covered Calls

With XLK at 73.15, 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% 2.19 0.6
5% 3.66 1.0
10% 7.32 2.0

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
Aug 24 74.00 0.09 8 1.1 0.57 (0.8%)
Aug 31 74.50 0.14 15 0.9 1.07 (1.5%)
5% Yield On XLK Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 24 74.00 0.09 8 1.1 0.57 (0.8%)
Aug 31 74.00 0.29 15 1.9 0.57 (0.8%)
10% Yield On XLK Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 24 73.50 0.27 8 3.4 0.07 (0.1%)
Aug 31 73.50 0.53 15 3.5 0.07 (0.1%)

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Want more examples? XLI Dividend | XLNX Dividend