DIA dividend capture

The SPDR Dow Diamond ETF is an interesting candidate for a dividend capture strategy–if you can do it in a tax sheltered account such as a traditional or ROTH IRA.   On an annual basis is it yielding around 2% and it distributes dividends monthly.  Its dividend payouts are not consistent month to month, they vary from an average of  $0.11 in January over the last 5 years, to and average of $0.33 in October.  The chart below gives details.   February’s average payout is around $0.25, which is pretty close to a .25% return since the DIA is around $100 per share right now.

DIA is unusual for a index ETF offering monthly dividends, in that its ex-dividend dates are the day before the option expiration date for that month.  For example DIA goes ex-dividend on 19-February and the last day of trading on the options is also the 19th with expiration on Saturday the 20th.

This arrangement sets up a straightforward dividend capture scheme using covered calls.   You buy DIA and sell DIA ITM calls, with an extrinsic  value (time value) of approximately the dividend value (historically about 0.25 for February).  At closing today, with DIA at $101.5, this would suggest the 98 Feb call, which at $3.75 would give the target extrinsic value.  The break-even point on this position will probably be 101.5-3.75 =97.75.  I say probably, because there is uncertainty on whether you collect the 0.25 per share dividend or not.

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2019 Dividend, Ex-Dividend, and Paydate / Distribution information for ETFs

I have collected dividend, ex-dividend, paydate/ distribution information for 2019 on the following ETFs. Alerian  AMLP Invesco  Quarterly Group I:  EWEM  EWMC  EWRE  EWSC  OEW  RCD  RFG  RFV  RGI  RHS  RPG  RPV  RZG  RZV  RSP  RTM  RYE  RYF  RYH  RYT  RYU  XLG iShares iShares:  AGG  CMF  CSJ  HYG  IEF  IEI  IGOV  ISHG  LQD  PFF  SHV  SHY  TIP  TLH  TLT iShares:  AGZ  CFT  CIU  EMB  GBF  …

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