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 |
| 63.42 |
63.55 |
63.48 |
-1.45 |
1.0M |
- |
0.0B |
ZROZ Dividend-Like Income Using Covered Calls
With ZROZ at 63.48, 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% |
1.90 |
0.5 |
| 5% |
3.17 |
0.9 |
| 10% |
6.35 |
1.7 |
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 ZROZ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jun 18 |
64.00 |
2.55 |
150 |
1.7 |
0.45 (0.7%) |
| Sep 18 |
64.00 |
3.10 |
242 |
1.3 |
0.45 (0.7%) |
| 5% Yield On ZROZ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jun 18 |
64.00 |
2.55 |
150 |
1.7 |
0.45 (0.7%) |
| Sep 18 |
64.00 |
3.10 |
242 |
1.3 |
0.45 (0.7%) |
| 10% Yield On ZROZ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 20 |
64.00 |
0.95 |
32 |
3.0 |
0.45 (0.7%) |
| Mar 20 |
64.00 |
1.55 |
60 |
2.6 |
0.45 (0.7%) |
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