VYM Dividend Type Payments

VANGUARD HIGH DIVIDEND YIELD I dividend

Although VYM has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on VANGUARD HIGH DIVIDEND YIELD I to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Tue 2:30 PM ET):

VANGUARD HIGH DIVIDEND YIELD I (VYM)
Bid Ask Last Change Volume P/E Market Cap
83.52 83.54 83.54 -0.41 1.1M - 287B

VYM Dividend-Like Income Using Covered Calls

With VYM at 83.54, 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% 2.51 0.7
5% 4.18 1.1
10% 8.35 2.3

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 VYM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 86.00 0.25 25 1.0 2.46 (2.9%)
Dec 21 86.00 0.60 60 1.0 2.46 (2.9%)
5% Yield On VYM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 85.00 0.55 25 2.2 1.46 (1.7%)
Dec 21 85.00 1.05 60 1.8 1.46 (1.7%)
10% Yield On VYM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 84.00 1.00 25 4.0 0.46 (0.6%)
Dec 21 84.00 1.60 60 2.7 0.46 (0.6%)

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