XLV Dividend Type Payments
Although XLV has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Health Care 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 - Health Care (XLV) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 133.70 |
134.22 |
133.93 |
-0.29 |
13.8M |
- |
20B |
XLV Dividend-Like Income Using Covered Calls
With XLV at 133.93, 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% |
4.02 |
1.1 |
| 5% |
6.70 |
1.8 |
| 10% |
13.39 |
3.7 |
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 XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
134.00 |
1.30 |
36 |
3.0 |
0.00 (0.0%) |
| Jul 3 |
134.50 |
0.20 |
7 |
2.9 |
0.28 (0.2%) |
| 5% Yield On XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
134.00 |
1.30 |
36 |
3.0 |
0.00 (0.0%) |
| Jul 3 |
134.50 |
0.20 |
7 |
2.9 |
0.28 (0.2%) |
| 10% Yield On XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
135.00 |
1.79 |
36 |
5.0 |
0.78 (0.6%) |
| Jul 11 |
134.00 |
1.20 |
15 |
6.5 |
0.00 (0.0%) |
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