VIG Dividend Type Payments

VANGUARD DIVIDEND APPRECIATION dividend

Although VIG has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on VANGUARD DIVIDEND APPRECIATION to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 1:10 PM ET):

VANGUARD DIVIDEND APPRECIATION (VIG)
Bid Ask Last Change Volume P/E Market Cap
104.92 104.95 104.91 -0.04 287K - 347B

VIG Dividend-Like Income Using Covered Calls

With VIG at 104.91, 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% 3.15 0.9
5% 5.25 1.4
10% 10.49 2.9

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 VIG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 108.00 0.35 26 1.3 3.05 (2.9%)
Dec 21 109.00 0.70 61 1.1 4.05 (3.9%)
5% Yield On VIG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 107.00 0.65 26 2.5 2.05 (2.0%)
Dec 21 108.00 1.00 61 1.6 3.05 (2.9%)
10% Yield On VIG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 106.00 1.05 26 4.0 1.05 (1.0%)
Dec 21 105.00 1.80 61 3.0 0.05 (0.0%)

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Want more examples? VIDI Dividend | VIIX Dividend