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 Thu 4:16 PM ET):
| SPDR Select Sector Fund - Consumer Staples (XLP) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 82.10 |
82.19 |
82.18 |
-0.04 |
10.9M |
- |
11B |
XLP Dividend-Like Income Using Covered Calls
With XLP at 82.18, 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% |
2.47 |
0.7 |
| 5% |
4.11 |
1.1 |
| 10% |
8.22 |
2.3 |
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 |
| Aug 1 |
82.50 |
0.81 |
30 |
2.7 |
0.31 (0.4%) |
| Jul 11 |
83.00 |
0.10 |
9 |
1.1 |
0.81 (1.0%) |
| 5% Yield On XLP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
82.50 |
0.81 |
30 |
2.7 |
0.31 (0.4%) |
| Aug 15 |
82.00 |
1.25 |
44 |
2.4 |
0.00 (0.0%) |
| 10% Yield On XLP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
82.50 |
0.81 |
30 |
2.7 |
0.31 (0.4%) |
| Aug 15 |
82.00 |
1.25 |
44 |
2.4 |
0.00 (0.0%) |
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