XLU Dividend Type Payments
Although XLU has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Utilities 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 - Utilities (XLU) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 79.26 |
79.45 |
79.25 |
+1.17 |
11.8M |
- |
11B |
XLU Dividend-Like Income Using Covered Calls
With XLU at 79.25, 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% |
2.38 |
0.7 |
| 5% |
3.96 |
1.1 |
| 10% |
7.93 |
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 XLU Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
80.00 |
0.36 |
22 |
1.6 |
0.55 (0.7%) |
| Dec 13 |
80.00 |
0.22 |
29 |
0.8 |
0.55 (0.7%) |
| 5% Yield On XLU Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
80.00 |
0.36 |
22 |
1.6 |
0.55 (0.7%) |
| Dec 20 |
80.00 |
1.30 |
36 |
3.6 |
0.55 (0.7%) |
| 10% Yield On XLU Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Dec 6 |
81.00 |
0.48 |
22 |
2.2 |
1.55 (2.0%) |
| Dec 20 |
80.00 |
1.30 |
36 |
3.6 |
0.55 (0.7%) |
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