XLK Dividend Type Payments
Although XLK has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Technology 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 Select Sector Fund - Technology (XLK) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 228.66 |
229.20 |
228.71 |
-5.82 |
5.6M |
- |
87B |
XLK Dividend-Like Income Using Covered Calls
With XLK at 228.71, 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% |
6.86 |
1.9 |
| 5% |
11.44 |
3.1 |
| 10% |
22.87 |
6.3 |
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 XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
230.00 |
2.18 |
22 |
9.9 |
0.80 (0.3%) |
| Dec 13 |
230.00 |
2.94 |
29 |
10.1 |
0.80 (0.3%) |
| 5% Yield On XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
230.00 |
2.18 |
22 |
9.9 |
0.80 (0.3%) |
| Dec 13 |
230.00 |
2.94 |
29 |
10.1 |
0.80 (0.3%) |
| 10% Yield On XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
230.00 |
2.18 |
22 |
9.9 |
0.80 (0.3%) |
| Dec 13 |
230.00 |
2.94 |
29 |
10.1 |
0.80 (0.3%) |
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