XLY Dividend Type Payments
Although XLY has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Consumer Discretionary 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 - Consumer Discretionary (XLY) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 223.63 |
224.00 |
223.78 |
+0.39 |
5.1M |
- |
25B |
XLY Dividend-Like Income Using Covered Calls
With XLY at 223.78, 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% |
6.71 |
1.8 |
| 5% |
11.19 |
3.1 |
| 10% |
22.38 |
6.1 |
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 XLY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Sep 5 |
225.00 |
1.51 |
29 |
5.2 |
1.00 (0.4%) |
| Sep 12 |
225.00 |
2.51 |
36 |
7.0 |
1.00 (0.4%) |
| 5% Yield On XLY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Sep 5 |
225.00 |
1.51 |
29 |
5.2 |
1.00 (0.4%) |
| Sep 12 |
225.00 |
2.51 |
36 |
7.0 |
1.00 (0.4%) |
| 10% Yield On XLY Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Sep 12 |
225.00 |
2.51 |
36 |
7.0 |
1.00 (0.4%) |
| Oct 17 |
225.00 |
5.05 |
71 |
7.1 |
1.00 (0.4%) |
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