XLK Dividend Type Payments
Although XLK has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Technology 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 - Technology (XLK) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 234.11 |
234.49 |
233.96 |
-4.79 |
4.9M |
- |
89B |
XLK Dividend-Like Income Using Covered Calls
With XLK at 233.96, 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% |
7.02 |
1.9 |
| 5% |
11.70 |
3.2 |
| 10% |
23.40 |
6.4 |
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 XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 7 |
235.00 |
4.60 |
32 |
14.4 |
0.51 (0.2%) |
| Jan 10 |
235.00 |
1.19 |
4 |
29.8 |
0.51 (0.2%) |
| 5% Yield On XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 7 |
235.00 |
4.60 |
32 |
14.4 |
0.51 (0.2%) |
| Jan 10 |
235.00 |
1.19 |
4 |
29.8 |
0.51 (0.2%) |
| 10% Yield On XLK Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 7 |
235.00 |
4.60 |
32 |
14.4 |
0.51 (0.2%) |
| Jan 10 |
235.00 |
1.19 |
4 |
29.8 |
0.51 (0.2%) |
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