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 Mon 2:15 PM ET):

Vanguard High Dividend Yield I (VYM)
Bid Ask Last Change Volume P/E Market Cap
88.69 88.70 88.69 -0.03 557K - 0.0B

VYM Dividend-Like Income Using Covered Calls

With VYM at 88.69, 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% 2.66 0.7
5% 4.43 1.2
10% 8.87 2.4

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
Jul 19 89.00 0.15 5 3.0 0.30 (0.3%)
Aug 16 90.00 0.25 33 0.8 1.30 (1.5%)
5% Yield On VYM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jul 19 89.00 0.15 5 3.0 0.30 (0.3%)
Aug 16 89.00 0.70 33 2.1 0.30 (0.3%)
10% Yield On VYM Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jul 19 89.00 0.15 5 3.0 0.30 (0.3%)

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