VV Dividend Type Payments

VANGUARD LG-CAP ETF dividend

Although VV has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on VANGUARD LG-CAP ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Fri 3:40 PM ET):

VANGUARD LG-CAP ETF (VV)
Bid Ask Last Change Volume P/E Market Cap
126.96 126.98 126.97 +0.05 182K - 201B

VV Dividend-Like Income Using Covered Calls

With VV at 126.97, 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% 3.81 1.0
5% 6.35 1.7
10% 12.70 3.5

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 VV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 130.00 0.40 29 1.4 3.02 (2.4%)
Jan 18 131.00 1.45 92 1.6 4.02 (3.2%)
5% Yield On VV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 129.00 0.90 29 3.1 2.02 (1.6%)
Jan 18 130.00 1.95 92 2.1 3.02 (2.4%)
10% Yield On VV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 128.00 1.55 29 5.3 1.02 (0.8%)
Jan 18 127.00 3.80 92 4.1 0.02 (0.0%)

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