spelling out words in the text

You might separate the letters of a "spelled out" word with dashes in reported speech -

Mary said "When you make the sign I want the word 'shop' to be spelled s-h-o-p-p-e".

You would read it aloud as "ess aitch oh pee pee ee"

However if you are just describing a sign in a piece of prose you would just reproduce the spelling within quotation marks.

I saw a shop in an English village. Above the door was a sign which read "Ye Olde Tea Shoppe".