XLV Dividend Type Payments
Although XLV has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Select Sector Fund - Health Care to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):
| SPDR Select Sector Fund - Health Care (XLV) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 140.44 |
140.69 |
140.43 |
+0.72 |
7.8M |
- |
21B |
XLV Dividend-Like Income Using Covered Calls
With XLV at 140.43, 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% |
4.21 |
1.2 |
| 5% |
7.02 |
1.9 |
| 10% |
14.04 |
3.8 |
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 XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 7 |
140.00 |
2.75 |
31 |
6.6 |
0.00 (0.0%) |
| Jan 10 |
141.00 |
0.07 |
3 |
2.3 |
0.31 (0.2%) |
| 5% Yield On XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 7 |
140.00 |
2.75 |
31 |
6.6 |
0.00 (0.0%) |
| Jan 10 |
141.00 |
0.07 |
3 |
2.3 |
0.31 (0.2%) |
| 10% Yield On XLV Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 7 |
140.00 |
2.75 |
31 |
6.6 |
0.00 (0.0%) |
| Feb 14 |
140.00 |
2.39 |
38 |
4.5 |
0.00 (0.0%) |
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