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 Mon 4:16 PM ET):

Vanguard Small-Cap Value ETF (VBR)
Bid Ask Last Change Volume P/E Market Cap
221.00 221.83 221.84 -0.22 327K - 8.6B

VBR Dividend-Like Income Using Covered Calls

With VBR at 221.84, 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% 6.66 1.8
5% 11.09 3.0
10% 22.18 6.1

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
Jun 18 225.00 7.90 158 5.0 3.17 (1.4%)
Feb 20 225.00 2.50 40 6.3 3.17 (1.4%)
5% Yield On VBR Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jun 18 225.00 7.90 158 5.0 3.17 (1.4%)
Feb 20 225.00 2.50 40 6.3 3.17 (1.4%)
10% Yield On VBR Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Feb 20 225.00 2.50 40 6.3 3.17 (1.4%)

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