XLV Dividend Type Payments
Although XLV has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Health Care 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 - Health Care (XLV) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 135.36 |
135.63 |
135.50 |
+0.14 |
7.3M |
- |
20B |
XLV Dividend-Like Income Using Covered Calls
With XLV at 135.50, 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% |
4.07 |
1.1 |
| 5% |
6.78 |
1.9 |
| 10% |
13.55 |
3.7 |
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 XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
140.00 |
0.38 |
30 |
1.3 |
4.37 (3.2%) |
| Aug 8 |
135.50 |
0.61 |
37 |
1.3 |
0.00 (0.0%) |
| 5% Yield On XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
135.00 |
2.50 |
44 |
4.3 |
0.00 (0.0%) |
| Oct 17 |
135.00 |
3.00 |
107 |
2.2 |
0.00 (0.0%) |
| 10% Yield On XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
135.00 |
2.50 |
44 |
4.3 |
0.00 (0.0%) |
| Jul 18 |
135.50 |
1.50 |
16 |
8.6 |
0.00 (0.0%) |
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