IWB Dividend Type Payments

iShares RUSSELL 1000 INDEX dividend

Although IWB has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on iShares RUSSELL 1000 INDEX to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 4:16 PM ET):

iShares RUSSELL 1000 INDEX (IWB)
Bid Ask Last Change Volume P/E Market Cap
159.20 160.60 159.13 +0.34 776K - 203B

IWB Dividend-Like Income Using Covered Calls

With IWB at 159.13, 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% 4.77 1.3
5% 7.96 2.2
10% 15.91 4.4

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 IWB Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 21 162.00 0.45 33 1.4 1.40 (0.9%)
Oct 19 162.00 0.95 61 1.6 1.40 (0.9%)
5% Yield On IWB Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 21 161.00 0.80 33 2.4 0.40 (0.3%)
Oct 19 161.00 1.35 61 2.2 0.40 (0.3%)

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