XP Dividend Type Payments
Although XP has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on XP Inc. - Class A 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):
| XP Inc. - Class A (XP) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 17.07 |
17.70 |
17.10 |
-0.06 |
5.7M |
10 |
10B |
XP Dividend-Like Income Using Covered Calls
With XP at 17.10, 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% |
0.51 |
0.1 |
| 5% |
0.86 |
0.2 |
| 10% |
1.71 |
0.5 |
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 XP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
19.00 |
0.10 |
29 |
0.3 |
1.30 (7.6%) |
| May 15 |
18.00 |
0.90 |
127 |
0.7 |
0.30 (1.8%) |
| 5% Yield On XP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
19.00 |
0.10 |
29 |
0.3 |
1.30 (7.6%) |
| May 15 |
18.00 |
0.90 |
127 |
0.7 |
0.30 (1.8%) |
| 10% Yield On XP Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| May 15 |
18.00 |
0.90 |
127 |
0.7 |
0.30 (1.8%) |
| Feb 20 |
18.00 |
0.40 |
43 |
0.9 |
0.30 (1.8%) |
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