RSP Dividend Type Payments
Although RSP has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Invesco S&P 500 Equal Weight ETF 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):
| Invesco S&P 500 Equal Weight ETF (RSP) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 161.76 |
163.80 |
162.66 |
+1.20 |
7.9M |
148 |
13B |
RSP Dividend-Like Income Using Covered Calls
With RSP at 162.66, 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% |
4.88 |
1.3 |
| 5% |
8.13 |
2.2 |
| 10% |
16.27 |
4.5 |
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 RSP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 2 |
163.00 |
1.10 |
16 |
1.9 |
0.00 (0.0%) |
| May 9 |
163.00 |
1.80 |
23 |
4.3 |
0.00 (0.0%) |
| 5% Yield On RSP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 2 |
164.00 |
0.70 |
16 |
4.4 |
0.20 (0.1%) |
| May 9 |
163.00 |
1.80 |
23 |
4.3 |
0.00 (0.0%) |
| 10% Yield On RSP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 9 |
164.00 |
1.10 |
23 |
4.8 |
0.20 (0.1%) |
| May 16 |
163.00 |
4.40 |
30 |
12.0 |
0.00 (0.0%) |
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