XLF Dividend Type Payments
Although XLF has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Financial 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 Select Sector Fund - Financial (XLF) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 48.34 |
48.36 |
48.33 |
+0.05 |
24.9M |
- |
44B |
XLF Dividend-Like Income Using Covered Calls
With XLF at 48.33, 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% |
1.45 |
0.4 |
| 5% |
2.42 |
0.7 |
| 10% |
4.83 |
1.3 |
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 XLF Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jan 3 |
48.50 |
0.20 |
4 |
5.0 |
0.14 (0.3%) |
| Feb 7 |
49.00 |
0.88 |
39 |
2.3 |
0.64 (1.3%) |
| 5% Yield On XLF Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jan 3 |
48.50 |
0.20 |
4 |
5.0 |
0.14 (0.3%) |
| Feb 7 |
49.00 |
0.88 |
39 |
2.3 |
0.64 (1.3%) |
| 10% Yield On XLF Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Jan 3 |
48.50 |
0.20 |
4 |
5.0 |
0.14 (0.3%) |
| Feb 7 |
49.00 |
0.88 |
39 |
2.3 |
0.64 (1.3%) |
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