A one-percentage-point rise in yields can take more off TLT's price than three years of payments
The November payment is due Thursday, and the past 12 distributions totaled $3.91 against $3.87 in the 12 before them.
Key takeaways
A one-percentage-point rise in yields would lower the price of BlackRock's iShares 20+ Year Treasury Bond ETF TLT by about $12.14 a share, as a first approximation. The past 12 distributions totaled $3.91, so the decline is more than three years of that pace.
The fund seeks to track an index that includes U.S. Treasury bonds with remaining maturities greater than 20 years, the ICE U.S. Treasury 20+ Year Bond Index. TLT had $47.5 billion in net assets on Oct. 30, and the expense ratio is 0.15%.
iShares reported an effective duration of 14.83 years as of Friday, Oct. 30, the measure it uses for how sensitive the price is to interest rates. The shares closed that day at $81.84. A one-percentage-point rise in yields would lower the price by about 14.83% at that duration, or $12.14 off Friday's close.
Monday, Nov. 2, is the ex-dividend date, the day the November payment is assigned to existing owners. A buyer of the shares on Monday does not receive it. iShares lists it at $0.343177 a share on its product page, payable Thursday, Nov. 5.
The monthly payment is not fixed
TLT pays monthly, and the amount is not fixed. November's distribution is 10% above October's $0.311581.
A wider jump already happened this year. April's payment was $0.34, up from $0.30 in March, and May's was $0.32.
That $3.91 includes the November payment. The 12 distributions before that run totaled $3.87.
Three yield readings are not next year's check
12 times the November distribution is $4.12 a share, 5.03% of Friday's close. That is a projection from one month, not a yield iShares publishes and not a promise of the next 12 checks.
iShares reported a 30-day Securities and Exchange Commission yield of 5.32% as of Oct. 29. The Securities and Exchange Commission describes that yield as income over 30 days after expenses, shown as an annualized percentage. The 5.32% is a year's rate built from those 30 days, not income earned in the month.
The same day, the 12-month trailing yield was 4.78%. That date falls before the November payment, so the figure does not include it.
The three readings are 5.03%, 5.32% and 4.78%. None of them is the cash the next 12 months will pay.
A one-percentage-point rise in yields is years of payments
Those yield figures describe income, and the monthly check will change. They do not describe the price.
A one-percentage-point rise in yields can take more off the share price than three years of payments at the $3.91 pace.
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