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 Tue 4:16 PM ET):

iShares IBOXX $ HIGH YIELD CORP (HYG)
Bid Ask Last Change Volume P/E Market Cap
86.12 86.15 86.13 -0.07 12.6M - 141B

HYG Dividend-Like Income Using Covered Calls

With HYG at 86.13, 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% 2.58 0.7
5% 4.31 1.2
10% 8.61 2.4

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 HYG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 28 86.00 0.22 4 1.8 0.00 (0.0%)
5% Yield On HYG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 28 86.00 0.22 4 1.8 0.00 (0.0%)

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