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 Tue 4:16 PM ET):
| SPDR Select Sector Fund - Technology (XLK) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 208.89 |
209.10 |
209.10 |
+0.97 |
3.8M |
- |
77B |
XLK Dividend-Like Income Using Covered Calls
With XLK at 209.10, 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% |
6.27 |
1.7 |
| 5% |
10.46 |
2.9 |
| 10% |
20.91 |
5.7 |
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 XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 2 |
210.00 |
2.09 |
4 |
52.3 |
0.90 (0.4%) |
| Jun 6 |
210.00 |
6.20 |
39 |
15.9 |
0.90 (0.4%) |
| 5% Yield On XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 2 |
210.00 |
2.09 |
4 |
52.3 |
0.90 (0.4%) |
| Jun 6 |
210.00 |
6.20 |
39 |
15.9 |
0.90 (0.4%) |
| 10% Yield On XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 2 |
210.00 |
2.09 |
4 |
52.3 |
0.90 (0.4%) |
| Jun 6 |
210.00 |
6.20 |
39 |
15.9 |
0.90 (0.4%) |
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