XLE Dividend Type Payments
Although XLE has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Energy Select Sector to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 2:20 PM ET):
| SPDR Select Sector Fund - Energy Select Sector (XLE) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 93.12 |
93.14 |
93.14 |
-0.43 |
7.2M |
- |
8.8B |
XLE Dividend-Like Income Using Covered Calls
With XLE at 93.14, 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% |
2.79 |
0.8 |
| 5% |
4.66 |
1.3 |
| 10% |
9.31 |
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 XLE Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
100.00 |
0.33 |
30 |
1.1 |
6.86 (7.4%) |
| Dec 13 |
93.00 |
1.59 |
37 |
3.9 |
0.00 (0.0%) |
| 5% Yield On XLE Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
93.00 |
2.31 |
30 |
7.2 |
0.00 (0.0%) |
| Dec 13 |
93.00 |
1.59 |
37 |
3.9 |
0.00 (0.0%) |
| 10% Yield On XLE Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
93.00 |
2.31 |
30 |
7.2 |
0.00 (0.0%) |
| Dec 13 |
93.00 |
1.59 |
37 |
3.9 |
0.00 (0.0%) |
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