VFH Dividend Type Payments

Vanguard Financials ETF dividend

Although VFH has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Vanguard Financials ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 12:45 PM ET):

Vanguard Financials ETF (VFH)
Bid Ask Last Change Volume P/E Market Cap
98.88 98.91 98.86 -0.86 94K - 3.7B

VFH Dividend-Like Income Using Covered Calls

With VFH at 98.86, 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% 2.97 0.8
5% 4.94 1.4
10% 9.89 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 VFH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 17 100.00 0.30 23 1.3 1.09 (1.1%)
Jun 21 100.00 0.90 58 1.6 1.09 (1.1%)
5% Yield On VFH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jun 21 100.00 0.90 58 1.6 1.09 (1.1%)
Aug 16 100.00 3.00 114 2.6 1.09 (1.1%)
10% Yield On VFH Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 15 99.00 5.60 205 2.7 0.09 (0.1%)

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