HYG Dividend Type Payments

iShares iBoxx $ High Yield Corporate Bond ETF dividend

Although HYG has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on iShares iBoxx $ High Yield Corporate Bond ETF 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 Corporate Bond ETF (HYG)
Bid Ask Last Change Volume P/E Market Cap
78.30 78.44 78.29 +0.25 23.0M - 18B

HYG Dividend-Like Income Using Covered Calls

With HYG at 78.29, 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% 2.35 0.6
5% 3.91 1.1
10% 7.83 2.1

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
Aug 2 78.50 0.08 8 1.0 0.06 (0.1%)

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