QQQ Dividend Type Payments
Although QQQ has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Invesco QQQ Trust, Series 1 to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 4:16 PM ET):
| Invesco QQQ Trust, Series 1 (QQQ) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 422.72 |
422.79 |
422.67 |
-27.99 |
115M |
- |
164B |
QQQ Dividend-Like Income Using Covered Calls
With QQQ at 422.67, 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% |
12.68 |
3.5 |
| 5% |
21.13 |
5.8 |
| 10% |
42.27 |
11.6 |
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 QQQ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 2 |
425.00 |
19.55 |
29 |
67.4 |
2.21 (0.5%) |
| May 9 |
425.00 |
20.98 |
36 |
58.3 |
2.21 (0.5%) |
| 5% Yield On QQQ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 2 |
425.00 |
19.55 |
29 |
67.4 |
2.21 (0.5%) |
| May 9 |
425.00 |
20.98 |
36 |
58.3 |
2.21 (0.5%) |
| 10% Yield On QQQ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 2 |
425.00 |
19.55 |
29 |
67.4 |
2.21 (0.5%) |
| May 9 |
425.00 |
20.98 |
36 |
58.3 |
2.21 (0.5%) |
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