Schwab ETF  2010  Ex-Dividend and Pay date information

Schwab has now published their ex-dividend / pay dates for all of 2010 for their no-fee ETFs.  The published 2010 dates are:

Ex-Dividend:  23-Dec-09   22-Mar-10 21-Jun-10 20-Sep-10    20-Dec-10

Pay Dates:   30-Dec-09  26-Mar-10   25-Jun-10   24-Sep-10   27-Dec-10

Schwab International Equity ETF™ SCHF
Schwab U.S. Small-Cap ETF™ SCHA
Schwab U.S. Large-Cap Value ETF™ SCHV
Schwab U.S. Large–Cap Growth ETF™ SCHG
Schwab U.S. Large-Cap ETF™ SCHX
Schwab U.S. Broad Market ETF™ SCHB

Schwab  posted their second quarter dividend information here.   Schwab’s distribution / pay dates are very timely — only 4 days after ex-dividend with this most recent dividend.

The  SCHX’s dividend has been similar to SPY’s percentage wise — I think SPY’s September payout will be around .55 — with SCHX currently at 26.  I’m assuming SCHX’s dividend will be around $0.13 per share.

The SCHX has 750 stocks in it, but appears to closely follow the S&P 500.

If you don’t see the ETF symbol you want there are a lot more here: Dividend, Ex-Dividend, and Paydate / Distribution Date information for ETFs ]]> http://sixfigureinvesting.com/2010/06/schwab-publishes-ex-dividend-payout-dates-for-their-no-fee-etf-funds/feed/ 1 http://sixfigureinvesting.com/2010/04/dividend-capture-with-covered-calls%e2%80%94too-hot-too-cold-or-just-right/ http://sixfigureinvesting.com/2010/04/dividend-capture-with-covered-calls%e2%80%94too-hot-too-cold-or-just-right/#comments Fri, 16 Apr 2010 05:32:56 +0000 http://sixfigureinvesting.com/?p=1143 One strategy for capturing dividends is to buy the stock/ETF and then sell calls against that security as a hedge—a covered call.  The value of the short calls moves in the opposite direction of the stock/ETF, providing a hedge.   There are three major variables with this strategy:

• If you sell deep in the money (ITM) options you may feel you’ve found the golden goose.  The calls provide a great hedge, virtually eliminating risk from your position.   Unfortunately, your calls will almost certainly be assigned the evening before the ex-dividend day.  The owners of the calls are not about to let you get away with collecting dividends with such low risk, so they exercise the option you sold them.  They call away your stock and they collect the dividend.  Your position is closed out—no dividend for you.  The only profit you might have is from any premium present when you created the position (if your net investment was less than the strike price).   Some people use this strategy hoping that their options will not be assigned, and not all are, but in my experience the percentage not assigned is very low.

Too hot  (too much risk)    Calls without enough hedge value,  calls that don’t expire for a long time

• What I have found to be a good combination is:
  • Find stocks/ETFs where the options will expire within 10 business days of the ex-dividend date
  • Create the covered call position about a week before the ex-dividend date
  • Choose a strike price that gives you a premium about equal to the dividend value.
• This recipe will usually result in a covered call position that will be assigned on the evening before the ex-dividend date.  You typically don’t collect the dividend, but since the option is closed out you keep the option premium which is roughly equal to the dividend amount.
• The calls will provide a decent hedge against risk.  Not enough to protect against a major market move, but they do provide significant protection
• If the stock/ETF value goes down after you put the covered call in place then the chances of call assignment decrease—bettering your chances of collecting the dividend.  If you do collect the dividend  the breakeven point on your position is improved, and your maximum profit potential goes up by the dividend amount.
• If the bid / ask spreads on the stocks / options are significant you will probably need to use a combo order to get a decent profit potential.
• While ok in flat or rising market — this position will not hedge a serious bear move — be prepared to bail out if the market goes seriously south

Related posts

• Dividend Capture Strategies
• Capturing dividends with covered calls–are you ready?
• Understanding covered calls–an analogy

DIA dividend history, click to enlarge

DIA did not payout any dividend this January. It appears that DIA had paid a dividend every month since at least 2002, so this is a very unusual event. Looking through the dividend histories of the 30 companies on the Dow Jones Industrial 30 Index it appears that JP Morgan & Chase Co. (JPM) might have been the culprit. Their January dividend dropped to $0.05 from last year’s $0.38 number in January 2009. Since DIA’s January payout tends to be one of the lower ones the DIA people might have decided this decreased payout wasn’t worth the trouble.

In some situations an effective way to hedge risk with a dividend capture strategy is to use covered call options.  If you are not familiar with options this might sound exotic, but it’s truly the training wheels of option trading.  With covered calls you can introduce yourself to the conservative, hedging possibilities of options while increasing your odds of making modest amounts of money.   Before getting into the details,  please review the checklist below, to see if you are ready / able to do this:

• Do you have enough capital?
  • This strategy requires you to buy hundreds of shares of stock to make it worth your trouble, do you have the money?
  • You can use margin to buy the stock, but that will increase your costs.

• Will you be content with a small gain?
  • This strategy is generally not effective with stocks with large dividends (e.g. 4% or higher).  It works better with stocks that offer annualized dividends in the 2% to 3% range
  • On the good news side, you generally get the small gain with less than 10 business days of investment

• Does the stock/ETF you want to capture the dividend on have a active option market?
  • If the options are thinly traded, or if appropriate strike prices are not available this strategy does not work

• Are you set up for at least the first level (simplest level) of options trading in your brokerage account?
  • If your account is not an IRA then you will need to have a margin account.  Don’t worry, there are no interest charges or chance of a margin call with this strategy (assuming you don’t buy the stock on margin)
  • This first level of option authorization usually allows covered calls and simple purchases / sales of puts and calls
  • Typically you can do these sorts of trades in a Roth / Traditional IRA — however you do need to apply for that capability if you don’t have it already

• Are you willing to learn about combo orders? These are orders that simultaneously fill your stock and options orders at a not-to-exceed price
  • These orders are prudent to use in fast moving markets, and when bid/ask prices are widely separated
  • Combo orders are not necessary if bid/ask spreads are small and if you are willing to do fast sequential market orders

Extra Credit

• Can you make your investment in an IRA account?
  • If so, this dividend strategy is more attractive, because you can defer taxes on any gains

Pass the test?  In my next post I’ll give some screening criteria for good positions and the basic setup of this dividend capture strategy.

Anyone with money can capture a dividend—you buy the stock (or ETF) before the ex-dividend date and hold it until the ex-dividend date. The challenge is to close out your position with a profit that is worth the risk. Typically the stock will drop by about the dividend amount when it starts trading on the ex-dividend day, but if the stock has a generally up day your overall profit can be better than the dividend. You lose money if the stock drops by more than the dividend amount (ignoring commissions)—and if the market goes bad you can lose many months worth of dividends in a hurry.

There are two ways to deal with this kind of risk, you can try to predict the future, or you can hedge. If you are any good at predicting the future then you don’t need to be messing around with dividends, you should just be buying and selling based on your predictions. With hedging you try to reduce, or better yet eliminate your risk by also investing in something that moves in the opposite direction of the stock so that the price movements cancel out. Some high quality hedges for a stock or ETF:

Hedges that can reduce your risk, but only provide medium protection include:

I have used one approach that offers a reasonable payoff, with reasonable risk—using deep-in-the-money stock option calls to capture the dividend amount.   More about this in my next post.

Ex-Dividend   1-Feb-10    1-Mar-10    1-Apr-10 3-May-10   01-Jun-10   1-Jul-10   2-Aug-10   1-Sep-10   1-Oct-10   1-Nov-10   1-Dec-10   28-Dec-10   1-Feb-11

Pay Date  2-Jan-10   5-Feb-10   5-Mar-10   8-Apr-10 7-May-10   07-Jun-10   8-Jul-10   6-Aug-10   8-Sep-10   7-Oct-10   5-Nov-10   3-Dec-10   04-Jan-11   5-Feb-11

AGZ      iShares Barclays Agency Bond Fund (AGZ)
CFT      iShares Barclays Credit Bond Fund (CFT)
CIU      iShares Barclays Intermediate Credit Bond Fund (CIU)
EMB     iShares JPMorgan USD Emerging Markets Bond Fund (EMB)
GBF      iShares Barclays Government/Credit Bond Fund (GBF)
GVI      iShares Barclays Intermediate Government/Credit Bond Fund (GVI)
MUAA iShares 2012 S&P AMT-Free Municipal Series (MUAA)
MUAB iShares 2013 S&P AMT-Free Municipal Series (MUAB)
MUAC iShares 2014 S&P AMT-Free Municipal Series (MUAC)
MUAD iShares 2015 S&P AMT-Free Municipal Series (MUAD)
MUAE iShares 2016 S&P AMT-Free Municipal Series (MUAE)
MUAG iShares 2017 S&P AMT-Free Municipal Series (MUAF)
MBB     iShares Barclays MBS Bond Fund (MBB)
MUB    iShares S&P National AMT-Free Municipal Bond Fund (MUB)
NYF     iShares S&P New York AMT-Free Municipal Bond Fund (NYF)
SUB      iShares S&P Short Term National AMT-Free Municipal Bond Fund (SUB)

Looking for ex-dividend information for other ETFs?   Check this page.

Schwab posted their 2010 ex-dividend / distribution dates for their no-fee ETFs here.

Original post…

Schwab’s new no-commission ETFs went ex-dividend last Monday, March 22nd.   The distribution date is 26-March–only four days later!   I had guessed Schwab would align with the quarterly iShares funds ex-dividends, but apparently they have decided to go it alone with apparently semi-random, unannounced ex-dividend dates.  The dividends to be paid were posted recently.  The distributions:

SCHA   $0.07

SCHB   $0.11

SCHG  $0.05

SCHV  $0.14

SCHX   $0.10  (I had guessed $0.12)

The two ex-dividend dates we have since the funds started, 23-Dec-09, a Thursday, and 22-Mar-10, a Monday, don’t suggest a pattern I can see.   Ex-dividend dates tend to follow a week / day of week pattern (e.g., Thursday on the 3rd week of the month), or a day of the month (e.g., 1st of the month unless it is not a business day).   The December date was the 17th business day, and the March date was the 16th, so not a usable pattern there either.  Guess we will have to wait another quarter to get another data point.   In the meantime I’m going to guess and predict the next Schwab fund ex-dividend date will be on 21-June-2010.

The last SPY ex-dividend date was 18th of June 2010.  The dividend was $0.53 ( I estimated $0.51)   The next payout / distribution date will be 30-July-2010.

See the SPDR website for the official scoop.  You must buy the ETF at least the day before to be eligible for the dividend.

SPY dividend history for the last 6 years is shown here.

Interested in SPY dividend capture?

• Overview of dividend capture strategies
• Dividend capture–are you ready?
• Dividend capture–one approach that works
• Three strategies for SPY dividend capture that don’t work
• Dividend capture–three approaches to skip

Looking for ex-dividend information for other ETFs?   Check this page.

SPDR’s 19-Mar-2010 dividend update reports SPY’s March 2010 dividend as $0.48  (I had estimated $0.52).  The pay date will be 30-April-2010.   The ex-dividend date is today, 19-March-2010.