XP Dividend Type Payments
Although XP has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on XP Inc. - Class A to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):
| XP Inc. - Class A (XP) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 15.14 |
16.13 |
16.10 |
-0.06 |
4.4M |
12 |
9.0B |
XP Dividend-Like Income Using Covered Calls
With XP at 16.10, 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% |
0.48 |
0.1 |
| 5% |
0.81 |
0.2 |
| 10% |
1.61 |
0.4 |
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 XP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jun 6 |
16.50 |
0.25 |
38 |
0.7 |
0.37 (2.3%) |
| May 9 |
16.50 |
0.15 |
10 |
1.5 |
0.37 (2.3%) |
| 5% Yield On XP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jun 6 |
16.50 |
0.25 |
38 |
0.7 |
0.37 (2.3%) |
| May 9 |
16.50 |
0.15 |
10 |
1.5 |
0.37 (2.3%) |
| 10% Yield On XP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jun 6 |
16.50 |
0.25 |
38 |
0.7 |
0.37 (2.3%) |
| May 9 |
16.50 |
0.15 |
10 |
1.5 |
0.37 (2.3%) |
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