VHT Dividend Type Payments

VANGUARD HEALTH CARE ETF dividend

Although VHT has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on VANGUARD HEALTH CARE 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):

VANGUARD HEALTH CARE ETF (VHT)
Bid Ask Last Change Volume P/E Market Cap
171.27 173.35 171.97 -2.03 215K - 84B

VHT Dividend-Like Income Using Covered Calls

With VHT at 171.97, 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% 5.16 1.4
5% 8.60 2.4
10% 17.20 4.7

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 VHT Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 179.00 0.45 29 1.6 5.65 (3.3%)
Dec 21 180.00 1.00 64 1.6 6.65 (3.9%)
5% Yield On VHT Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 177.00 0.90 29 3.1 3.65 (2.1%)
Dec 21 178.00 1.70 64 2.7 4.65 (2.7%)
10% Yield On VHT Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 175.00 1.50 29 5.2 1.65 (1.0%)
Dec 21 174.00 3.40 64 5.3 0.65 (0.4%)

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Top 10 Open Interest For Nov 16 Expiration     Top 5 High Yield
1.SPY dividend 6.SPX dividend   1.SNAP dividend
2.EWZ dividend 7.FXI dividend   2.TWTR dividend
3.EEM dividend 8.VXX dividend   3.AMRN dividend
4.PBR dividend 9.IWM dividend   4.AMD dividend
5.QQQ dividend 10.BAC dividend   5.UVXY dividend

Want more examples? VHC Dividend | VIA Dividend