SCHX Dividend Type Payments
Although SCHX has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Schwab U.S. Large-Cap ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 4:16 PM ET):
| Schwab U.S. Large-Cap ETF (SCHX) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 24.87 |
24.94 |
24.91 |
+0.05 |
7.4M |
- |
47B |
SCHX Dividend-Like Income Using Covered Calls
With SCHX at 24.91, 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% |
0.75 |
0.2 |
| 5% |
1.25 |
0.3 |
| 10% |
2.49 |
0.7 |
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 SCHX Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
25.00 |
0.20 |
26 |
0.8 |
0.06 (0.2%) |
| Nov 21 |
26.00 |
0.40 |
124 |
0.3 |
1.06 (4.3%) |
| 5% Yield On SCHX Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
25.00 |
0.20 |
26 |
0.8 |
0.06 (0.2%) |
| 10% Yield On SCHX Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
25.00 |
0.20 |
26 |
0.8 |
0.06 (0.2%) |
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