XLC Dividend Type Payments

Although XLC has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on The Communication Services Select Sector SPDR Fund 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):

The Communication Services Select Sector SPDR Fund (XLC)
Bid Ask Last Change Volume P/E Market Cap
96.14 96.58 96.58 +1.74 3.5M - 16B

XLC Dividend-Like Income Using Covered Calls

With XLC at 96.58, 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% 2.90 0.8
5% 4.83 1.3
10% 9.66 2.6

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 XLC Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Apr 17 98.00 0.40 35 1.1 1.42 (1.5%)
Sep 19 100.00 3.00 190 1.6 3.42 (3.5%)
5% Yield On XLC Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 19 100.00 3.00 190 1.6 3.42 (3.5%)
Dec 19 97.00 5.80 281 2.1 0.42 (0.4%)
10% Yield On XLC Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Mar 21 97.00 0.45 8 5.6 0.42 (0.4%)

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