XLU Dividend Type Payments
Although XLU has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Utilities 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 - Utilities (XLU) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 55.68 |
55.91 |
55.71 |
+0.17 |
9.3M |
- |
0.0B |
XLU Dividend-Like Income Using Covered Calls
With XLU at 55.71, 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% |
1.67 |
0.5 |
| 5% |
2.79 |
0.8 |
| 10% |
5.57 |
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 XLU Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 22 |
56.00 |
0.16 |
8 |
2.0 |
0.09 (0.2%) |
| Mar 1 |
57.00 |
0.08 |
15 |
0.5 |
1.09 (2.0%) |
| 5% Yield On XLU Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 22 |
56.00 |
0.16 |
8 |
2.0 |
0.09 (0.2%) |
| Mar 1 |
56.50 |
0.18 |
15 |
1.2 |
0.59 (1.1%) |
| 10% Yield On XLU Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 22 |
56.00 |
0.16 |
8 |
2.0 |
0.09 (0.2%) |
| Mar 1 |
56.00 |
0.35 |
15 |
2.3 |
0.09 (0.2%) |
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