VO Dividend Type Payments

Vanguard Mid-Cap ETF dividend

Although VO has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Vanguard Mid-Cap ETF to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):

Vanguard Mid-Cap ETF (VO)
Bid Ask Last Change Volume P/E Market Cap
278.17 283.87 280.88 +1.05 1.1M - 16B

VO Dividend-Like Income Using Covered Calls

With VO at 280.88, 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% 8.43 2.3
5% 14.04 3.8
10% 28.09 7.7

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 VO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 15 285.00 2.90 31 9.4 1.13 (0.4%)
Oct 17 285.00 5.60 94 6.0 1.13 (0.4%)
5% Yield On VO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 15 285.00 2.90 31 9.4 1.13 (0.4%)
Oct 17 285.00 5.60 94 6.0 1.13 (0.4%)
10% Yield On VO Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 15 285.00 2.90 31 9.4 1.13 (0.4%)

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