HYG Dividend Type Payments

iShares IBOXX $ HIGH YIELD CORP dividend

Although HYG has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on iShares IBOXX $ HIGH YIELD CORP to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 4:16 PM ET):

iShares IBOXX $ HIGH YIELD CORP (HYG)
Bid Ask Last Change Volume P/E Market Cap
83.20 83.27 83.27 -0.25 64.1M - 141B

HYG Dividend-Like Income Using Covered Calls

With HYG at 83.27, here's a table showing how big the annual "dividend" (ie. 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% 2.50 0.7
5% 4.16 1.1
10% 8.33 2.3

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 HYG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 83.50 0.25 8 3.1 0.23 (0.3%)
Nov 30 84.00 0.18 15 1.2 0.73 (0.9%)
5% Yield On HYG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 83.50 0.25 8 3.1 0.23 (0.3%)
Nov 30 84.00 0.18 15 1.2 0.73 (0.9%)
10% Yield On HYG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 23 83.50 0.25 8 3.1 0.23 (0.3%)
Nov 30 83.50 0.39 15 2.6 0.23 (0.3%)

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Want more examples? HYEM Dividend | HYGH Dividend