ZROZ Dividend Type Payments
Although ZROZ has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on PIMCO 25 Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 4:16 PM ET):
| PIMCO 25 Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund (ZROZ) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 72.68 |
72.85 |
72.96 |
-1.71 |
912K |
- |
0.0B |
ZROZ Dividend-Like Income Using Covered Calls
With ZROZ at 72.96, 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% |
2.19 |
0.6 |
| 5% |
3.65 |
1.0 |
| 10% |
7.30 |
2.0 |
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 ZROZ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 17 |
73.00 |
1.95 |
45 |
4.3 |
0.15 (0.2%) |
| Sep 19 |
73.00 |
4.30 |
200 |
2.2 |
0.15 (0.2%) |
| 5% Yield On ZROZ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 17 |
73.00 |
1.95 |
45 |
4.3 |
0.15 (0.2%) |
| Sep 19 |
73.00 |
4.30 |
200 |
2.2 |
0.15 (0.2%) |
| 10% Yield On ZROZ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 17 |
73.00 |
1.95 |
45 |
4.3 |
0.15 (0.2%) |
| Sep 19 |
73.00 |
4.30 |
200 |
2.2 |
0.15 (0.2%) |
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