XLU Dividend Type Payments

Although XLU has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on UTIL SELECT SECTOR SPDR 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):

UTIL SELECT SECTOR SPDR (XLU)
Bid Ask Last Change Volume P/E Market Cap
54.28 54.38 54.33 -0.19 9.6M - 76B

XLU Dividend-Like Income Using Covered Calls

With XLU at 54.33, 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% 1.63 0.4
5% 2.72 0.7
10% 5.43 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
Aug 24 55.00 0.08 5 1.6 0.62 (1.1%)
Aug 31 55.50 0.07 12 0.6 1.12 (2.1%)
5% Yield On XLU Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 24 55.00 0.08 5 1.6 0.62 (1.1%)
Aug 31 55.00 0.18 12 1.5 0.62 (1.1%)
10% Yield On XLU Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 24 55.00 0.08 5 1.6 0.62 (1.1%)
Aug 31 55.00 0.18 12 1.5 0.62 (1.1%)

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Top 10 Open Interest For Sep 21 Expiration     Top 5 High Yield
1.EEM dividend 6.GE dividend   1.COTY dividend
2.SPY dividend 7.GLD dividend   2.MOMO dividend
3.SPX dividend 8.FB dividend   3.UVXY dividend
4.QQQ dividend 9.IWM dividend   4.AKRX dividend
5.XLF dividend 10.GDX dividend   5.LB dividend

Want more examples? XLRN Dividend | XLV Dividend