VXF Dividend Type Payments

VANGUARD EXTENDED MARKET INDEX dividend

Although VXF has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on VANGUARD EXTENDED MARKET INDEX 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 EXTENDED MARKET INDEX (VXF)
Bid Ask Last Change Volume P/E Market Cap
112.39 112.94 112.39 -1.08 146K - 680B

VXF Dividend-Like Income Using Covered Calls

With VXF at 112.39, 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% 3.37 0.9
5% 5.62 1.5
10% 11.24 3.1

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 VXF Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 116.00 0.40 29 1.4 3.06 (2.7%)
Dec 21 117.00 0.70 64 1.1 4.06 (3.6%)
5% Yield On VXF Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 114.00 0.80 29 2.8 1.06 (0.9%)
Dec 21 116.00 1.15 64 1.8 3.06 (2.7%)
10% Yield On VXF Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 113.00 1.30 29 4.5 0.06 (0.1%)
Dec 21 113.00 2.10 64 3.3 0.06 (0.1%)

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