XHB Dividend Type Payments
Although XHB has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on State Street SPDR S&P Homebuilders ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 4:16 PM ET):
| State Street SPDR S&P Homebuilders ETF (XHB) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 106.62 |
109.78 |
109.11 |
+0.71 |
1.4M |
- |
5.8B |
XHB Dividend-Like Income Using Covered Calls
With XHB at 109.11, 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% |
3.27 |
0.9 |
| 5% |
5.46 |
1.5 |
| 10% |
10.91 |
3.0 |
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 XHB Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
110.00 |
0.05 |
5 |
1.0 |
0.22 (0.2%) |
| Mar 6 |
109.50 |
1.42 |
33 |
3.5 |
0.00 (0.0%) |
| 5% Yield On XHB Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Mar 6 |
109.50 |
1.42 |
33 |
3.5 |
0.00 (0.0%) |
| Feb 13 |
110.00 |
0.48 |
12 |
4.0 |
0.22 (0.2%) |
| 10% Yield On XHB Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Mar 6 |
109.50 |
1.42 |
33 |
3.5 |
0.00 (0.0%) |
| Feb 13 |
110.00 |
0.48 |
12 |
4.0 |
0.22 (0.2%) |
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