PPA Dividend Type Payments
Although PPA has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Invesco Aerospace & Defense ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 4:16 PM ET):
| Invesco Aerospace & Defense ETF (PPA) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 154.75 |
157.38 |
156.12 |
+0.93 |
199K |
- |
2.2B |
PPA Dividend-Like Income Using Covered Calls
With PPA at 156.12, 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% |
4.68 |
1.3 |
| 5% |
7.81 |
2.1 |
| 10% |
15.61 |
4.3 |
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 PPA Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Oct 17 |
159.00 |
0.20 |
4 |
5.0 |
1.62 (1.0%) |
| Dec 19 |
160.00 |
1.45 |
67 |
2.2 |
2.62 (1.7%) |
| 5% Yield On PPA Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Oct 17 |
159.00 |
0.20 |
4 |
5.0 |
1.62 (1.0%) |
| Dec 19 |
160.00 |
1.45 |
67 |
2.2 |
2.62 (1.7%) |
| 10% Yield On PPA Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Oct 17 |
159.00 |
0.20 |
4 |
5.0 |
1.62 (1.0%) |
| Nov 21 |
159.00 |
1.70 |
39 |
4.4 |
1.62 (1.0%) |
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