I wrote earlier that we had been traveling for most of two weeks in early October. Since then I have been working to close a real estate deal and some volunteer work. All of that is a poor excuse for why it’s taken so long to publish September end of month postings, but it’s all I have.
Most of the stocks that I own and write Covered Calls upon also pay dividends. Dividends occur on a regular basis and add significantly to my annual investment income. Year to date I have received a total of $11,381.71 in dividends in my various accounts. My year to date average monthly dividends received is now $1,264.63.
The year-to-date dividends currently represent about 51.95% of my average monthly investment cash flow and about 2.71% return on my current basis value. I still believe the current percentage is an anomaly and is a result of a reduced positive cash flow from options. The amount of funds tied up in longer-term option contracts reduces monthly option cash flow.
My YTD dividends are down by $292.61 on a monthly average from last year, an improvement by $114.53. That represents a 17.56% decrease to date year over year. Last month I was down 19.08% YTD. Most of the decrease is due to LNCO reducing its dividend from .2416 to .1042 per month. The result is a reduction of about $289 per month in my dividend cash flow. That is going to get worse because LNCO suspended its regular dividend after October, opting to make a determination each month. Another $218.82 monthly dividend loss. In the most recent month, I received notice of the following dividends paid in various accounts for a total of $1,415.18.
Please notice that several stocks pay monthly dividends and are identified with a 12 in the Dividends per Year column. The annualized dividend yield for the monthly dividend payers is based upon the simple and generally false assumption that they will pay the same dividend each month for the next 12 months. The actual annualized dividend yield may be more or less than illustrated here.
I started using a new strategy for dividends several months ago. I subscribe to Dividends.Com. One of the items in their daily email is a listing of some stocks going ex-dividend the next day. I use that list to buy stocks to capture additional dividends. I also sell Covered Calls on the stock at a strike near the purchase price for the next expiration date. Sometimes I make a little on the stock, sometimes I lose a little on the stock. However, I make money on the total set of transactions. I have run into a snag with this strategy. I still own several of these stocks. I can’t seem to get them called away as I expected. However, I keep trying and making more option premiums and sometimes more dividends.
I am just holding some stocks while I wait for their price to rise to a point that I am comfortable selling new Covered Calls. If I do not sell new Covered Calls I am content to capture the nice dividend for an indefinite period. Notably, PGF, ANH and MFA fall into this category. I am also holding shares of PGH, LNCO, FCX and NLY without writing Covered Calls on them as I wait for the opportunity to sell new contracts at my desired strike prices.
I use my basis per share to determine the simple and annualized percentage return because I feel that it gives me a better representation of the value of the dividends as they relate to my portfolio. My basis may be above or below the market price which causes my return to be lower or higher than published yields for a stock. I calculate my basis per share as my acquisition price less any option premiums received on those shares. I do not use dividends to reduce my basis.
Here is a chart of my Monthly Average Dividends received by year beginning in 2009. I was not tracking the dividends prior to 2009.
