XLP Dividend Type Payments
Although XLP has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Consumer Staples 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 - Consumer Staples (XLP) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 54.33 |
54.67 |
54.50 |
-0.94 |
20.0M |
- |
0.0B |
XLP Dividend-Like Income Using Covered Calls
With XLP at 54.50, 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% |
1.64 |
0.4 |
| 5% |
2.73 |
0.7 |
| 10% |
5.45 |
1.5 |
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 XLP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 21 |
55.50 |
0.09 |
8 |
1.1 |
0.83 (1.5%) |
| Dec 28 |
55.50 |
0.14 |
15 |
0.9 |
0.83 (1.5%) |
| 5% Yield On XLP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 21 |
55.50 |
0.09 |
8 |
1.1 |
0.83 (1.5%) |
| Dec 28 |
55.50 |
0.14 |
15 |
0.9 |
0.83 (1.5%) |
| 10% Yield On XLP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 21 |
55.00 |
0.22 |
8 |
2.8 |
0.33 (0.6%) |
| Dec 28 |
55.00 |
0.28 |
15 |
1.9 |
0.33 (0.6%) |
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