VUG Dividend Type Payments

VANGUARD GROWTH ETF dividend

Although VUG has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on VANGUARD GROWTH 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 GROWTH ETF (VUG)
Bid Ask Last Change Volume P/E Market Cap
153.76 156.90 155.99 +0.18 515K - 808B

VUG Dividend-Like Income Using Covered Calls

With VUG at 155.99, 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% 4.68 1.3
5% 7.80 2.1
10% 15.60 4.3

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 VUG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 21 158.00 0.60 36 1.7 1.10 (0.7%)
Dec 21 160.00 2.15 127 1.7 3.10 (2.0%)
5% Yield On VUG Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 21 157.00 1.10 36 3.1 0.10 (0.1%)
Mar 15 159.00 4.60 211 2.2 2.10 (1.3%)

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Want more examples? VTWO Dividend | VUSE Dividend