SPY Dividend Type Payments

SPDR S&P 500 dividend

Although SPY has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR S&P 500 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):

SPDR S&P 500 (SPY)
Bid Ask Last Change Volume P/E Market Cap
671.66 671.69 670.97 +0.66 94.2M - 706B

SPY Dividend-Like Income Using Covered Calls

With SPY at 670.97, 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% 20.13 5.5
5% 33.55 9.2
10% 67.10 18.4

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 SPY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 5 669.00 14.63 29 41.2 0.00 (0.0%)
Dec 12 669.00 16.66 36 38.8 0.00 (0.0%)
5% Yield On SPY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 5 669.00 14.63 29 41.2 0.00 (0.0%)
Dec 12 669.00 16.66 36 38.8 0.00 (0.0%)
10% Yield On SPY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 5 669.00 14.63 29 41.2 0.00 (0.0%)
Dec 12 669.00 16.66 36 38.8 0.00 (0.0%)

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