SPY Dividend Type Payments

SPDR S&P 500 dividend

Although SPY has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR S&P 500 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):

SPDR S&P 500 (SPY)
Bid Ask Last Change Volume P/E Market Cap
586.23 586.27 586.08 -2.14 51.4M - 504B

SPY Dividend-Like Income Using Covered Calls

With SPY at 586.08, 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% 17.58 4.8
5% 29.30 8.0
10% 58.61 16.1

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 SPY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jan 3 584.00 4.59 4 58.0 0.00 (0.0%)
Feb 7 585.00 13.20 39 30.6 0.00 (0.0%)
5% Yield On SPY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jan 3 584.00 4.59 4 58.0 0.00 (0.0%)
Feb 7 585.00 13.20 39 30.6 0.00 (0.0%)
10% Yield On SPY Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jan 3 584.00 4.59 4 58.0 0.00 (0.0%)
Feb 7 585.00 13.20 39 30.6 0.00 (0.0%)

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