VO Dividend Type Payments

VANGUARD MID-CAP ETF dividend

Although VO has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on VANGUARD MID-CAP ETF 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 MID-CAP ETF (VO)
Bid Ask Last Change Volume P/E Market Cap
152.77 152.84 152.87 -0.09 124K - 980B

VO Dividend-Like Income Using Covered Calls

With VO at 152.87, 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% 4.59 1.3
5% 7.64 2.1
10% 15.29 4.2

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 VO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 158.00 0.35 26 1.3 5.16 (3.4%)
Dec 21 157.00 0.90 61 1.5 4.16 (2.7%)
5% Yield On VO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 157.00 0.55 26 2.1 4.16 (2.7%)
Dec 21 156.00 1.35 61 2.2 3.16 (2.1%)
10% Yield On VO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 154.00 1.50 26 5.8 1.16 (0.8%)
Dec 21 153.00 2.90 61 4.8 0.16 (0.1%)

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Want more examples? VNTR Dividend | VOC Dividend