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
85.38 85.42 85.40 -0.09 13.5M - 150B

HYG Dividend-Like Income Using Covered Calls

With HYG at 85.40, 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% 2.56 0.7
5% 4.27 1.2
10% 8.54 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
May 25 85.50 0.10 8 1.3 0.08 (0.1%)
Jun 1 85.50 0.12 15 0.8 0.08 (0.1%)
5% Yield On HYG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 25 85.50 0.10 8 1.3 0.08 (0.1%)

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Want more examples? HYEM Dividend | HYGH Dividend