SDY Dividend Type Payments
Although SDY has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR S&P Dividend 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):
| SPDR S&P Dividend ETF (SDY) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 138.56 |
140.57 |
139.57 |
+1.54 |
165K |
- |
23B |
SDY Dividend-Like Income Using Covered Calls
With SDY at 139.57, 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% |
4.19 |
1.1 |
| 5% |
6.98 |
1.9 |
| 10% |
13.96 |
3.8 |
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 SDY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Nov 21 |
140.00 |
1.75 |
39 |
3.0 |
0.00 (0.0%) |
| Jan 16 |
140.00 |
2.75 |
95 |
2.3 |
0.00 (0.0%) |
| 5% Yield On SDY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Nov 21 |
140.00 |
1.75 |
39 |
3.0 |
0.00 (0.0%) |
| Jan 16 |
140.00 |
2.75 |
95 |
2.3 |
0.00 (0.0%) |
| 10% Yield On SDY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Nov 21 |
141.00 |
1.55 |
39 |
4.0 |
0.43 (0.3%) |
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