VAW Dividend Type Payments

Vanguard Materials ETF dividend

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

Vanguard Materials ETF (VAW)
Bid Ask Last Change Volume P/E Market Cap
190.78 196.78 193.18 -1.65 24K - 1.7B

VAW Dividend-Like Income Using Covered Calls

With VAW at 193.18, 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% 5.80 1.6
5% 9.66 2.6
10% 19.32 5.3

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 VAW Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 15 197.00 1.00 52 1.9 0.22 (0.1%)
Nov 21 196.00 6.00 150 3.5 0.00 (0.0%)
5% Yield On VAW Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 21 196.00 6.00 150 3.5 0.00 (0.0%)
Feb 20 196.00 8.50 241 3.2 0.00 (0.0%)

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