XOP Dividend Type Payments
Although XOP has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on State Street SPDR S&P Oil & Gas Exploration & Production ETF 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):
| State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 127.65 |
127.99 |
127.50 |
-1.46 |
4.8M |
- |
0.4B |
XOP Dividend-Like Income Using Covered Calls
With XOP at 127.50, 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% |
3.83 |
1.0 |
| 5% |
6.38 |
1.7 |
| 10% |
12.75 |
3.5 |
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 XOP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
128.00 |
2.94 |
33 |
8.9 |
0.01 (0.0%) |
| Jan 9 |
127.50 |
1.43 |
5 |
18.8 |
0.00 (0.0%) |
| 5% Yield On XOP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
128.00 |
2.94 |
33 |
8.9 |
0.01 (0.0%) |
| Jan 9 |
127.50 |
1.43 |
5 |
18.8 |
0.00 (0.0%) |
| 10% Yield On XOP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
128.00 |
2.94 |
33 |
8.9 |
0.01 (0.0%) |
| Jan 9 |
127.50 |
1.43 |
5 |
18.8 |
0.00 (0.0%) |
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