XHE Dividend Type Payments

SPDR S&P Health Care Equipment dividend

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

SPDR S&P Health Care Equipment (XHE)
Bid Ask Last Change Volume P/E Market Cap
80.46 81.75 81.03 +1.53 14K - 0.1B

XHE Dividend-Like Income Using Covered Calls

With XHE at 81.03, 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% 2.43 0.7
5% 4.05 1.1
10% 8.10 2.2

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 XHE Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 21 85.00 0.40 33 1.2 3.25 (4.0%)
May 15 82.00 2.10 208 1.0 0.25 (0.3%)
5% Yield On XHE Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 21 85.00 0.40 33 1.2 3.25 (4.0%)
May 15 85.00 3.00 208 1.4 3.25 (4.0%)

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Want more examples? XHB Dividend | XHR Dividend