EDV Dividend Type Payments

Vanguard Extended Duration Treasury ETF dividend

Although EDV has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Vanguard Extended Duration Treasury 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 Extended Duration Treasury ETF (EDV)
Bid Ask Last Change Volume P/E Market Cap
65.80 65.92 65.85 -0.52 1.4M - 0.1B

EDV Dividend-Like Income Using Covered Calls

With EDV at 65.85, here's a table showing how big the annual "dividend" (i.e. 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% 1.98 0.5
5% 3.29 0.9
10% 6.59 1.8

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 EDV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 15 66.00 1.55 120 1.3 0.08 (0.1%)
Dec 18 66.00 2.50 337 0.7 0.08 (0.1%)
5% Yield On EDV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 15 66.00 1.55 120 1.3 0.08 (0.1%)
Feb 20 66.00 0.75 36 2.1 0.08 (0.1%)
10% Yield On EDV Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Feb 20 66.00 0.75 36 2.1 0.08 (0.1%)

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Want more examples? EDU Dividend | EDZ Dividend