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 Wed 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 |
| 73.62 |
74.02 |
73.47 |
+0.65 |
216K |
- |
0.0B |
ZROZ Dividend-Like Income Using Covered Calls
With ZROZ at 73.47, 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% |
2.20 |
0.6 |
| 5% |
3.67 |
1.0 |
| 10% |
7.35 |
2.0 |
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 |
| Apr 17 |
74.00 |
1.90 |
51 |
3.7 |
0.00 (0.0%) |
| Sep 19 |
74.00 |
4.20 |
206 |
2.0 |
0.00 (0.0%) |
| 5% Yield On ZROZ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 17 |
74.00 |
1.90 |
51 |
3.7 |
0.00 (0.0%) |
| Sep 19 |
74.00 |
4.20 |
206 |
2.0 |
0.00 (0.0%) |
| 10% Yield On ZROZ Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 17 |
74.00 |
1.90 |
51 |
3.7 |
0.00 (0.0%) |
| Sep 19 |
74.00 |
4.20 |
206 |
2.0 |
0.00 (0.0%) |
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