STIP Dividend Type Payments
Although STIP has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on iShares 0-5 Year TIPS Bond ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 4:16 PM ET):
iShares 0-5 Year TIPS Bond ETF (STIP) | ||||||
---|---|---|---|---|---|---|
Bid | Ask | Last | Change | Volume | P/E | Market Cap |
99.08 | 99.40 | 99.17 | -0.14 | 505K | - | 8.5B |
STIP Dividend-Like Income Using Covered Calls
With STIP at 99.17, 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% | 2.98 | 0.8 |
5% | 4.96 | 1.4 |
10% | 9.92 | 2.7 |
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 STIP Using Covered Calls | ||||||
---|---|---|---|---|---|---|
Expiration | Strike | Call Bid | Days | Cents/Day | Upside Potential | |
Aug 16 | 100.00 | 1.20 | 114 | 1.1 | 0.60 (0.6%) |
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Top 10 Open Interest For May 17 Expiration | Top 5 High Yield | |||||
---|---|---|---|---|---|---|
1. | QQQ dividend | 6. | EEM dividend | 1. | WOLF dividend | |
2. | HYG dividend | 7. | KWEB dividend | 2. | FSLY dividend | |
3. | IWM dividend | 8. | SLV dividend | 3. | INTC dividend | |
4. | SPY dividend | 9. | TSLA dividend | 4. | GRPN dividend | |
5. | FXI dividend | 10. | NVDA dividend | 5. | MPW dividend |
Want more examples? STIM Dividend | STKL Dividend