VBR Dividend Type Payments

Vanguard Small-Cap Value ETF dividend

Although VBR has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Vanguard Small-Cap Value 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 Small-Cap Value ETF (VBR)
Bid Ask Last Change Volume P/E Market Cap
179.00 189.00 185.74 +0.17 519K - 7.2B

VBR Dividend-Like Income Using Covered Calls

With VBR at 185.74, 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% 5.57 1.5
5% 9.29 2.5
10% 18.57 5.1

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 VBR Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 16 191.00 0.20 8 2.5 2.00 (1.1%)
Sep 19 190.00 6.20 134 4.6 1.00 (0.5%)
5% Yield On VBR Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 19 190.00 6.20 134 4.6 1.00 (0.5%)
Dec 19 190.00 9.30 225 4.1 1.00 (0.5%)

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