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 Mon 4:16 PM ET):
| SPDR Select Sector Fund - Utilities (XLU) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 56.39 |
56.60 |
56.57 |
+0.11 |
21.1M |
- |
0.0B |
XLU Dividend-Like Income Using Covered Calls
With XLU at 56.57, 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% |
1.70 |
0.5 |
| 5% |
2.83 |
0.8 |
| 10% |
5.66 |
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 |
| Dec 14 |
58.00 |
0.03 |
5 |
0.6 |
1.40 (2.5%) |
| Dec 21 |
58.00 |
0.12 |
12 |
1.0 |
1.40 (2.5%) |
| 5% Yield On XLU Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 14 |
57.50 |
0.09 |
5 |
1.8 |
0.90 (1.6%) |
| Dec 21 |
58.00 |
0.12 |
12 |
1.0 |
1.40 (2.5%) |
| 10% Yield On XLU Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 14 |
57.50 |
0.09 |
5 |
1.8 |
0.90 (1.6%) |
| Dec 21 |
57.50 |
0.22 |
12 |
1.8 |
0.90 (1.6%) |
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