Today, 8/20/12, I sold 2 CSCO Dec12 $21 Covered Calls for a net deposit of $62.48 in an IRA account. My basis for these CSCO shares is now $19.20, excluding dividends received. This transaction represents about a 1.60% simple return and about a 4.30% annualized return on my prior basis.
The 36 YAHOO brokers continue to be slightly on CSCO with an average recommendation of 2.2 (1.0 is a Strong Buy and 5.0 is a Strong Sell) and an average 12 month target of $21.43. S&P has a 12-month price target of $23 and a Buy recommendation. MarketEdge has a price opinion of $17.54 and a Long recommendation.
What caused me to begin trading CSCO was that it has finally committed to paying a dividend. CSCO began paying a .06 dividend in July 2011, increased the dividend to .08 in April 2012 and has increased it once again, this time by 75%, to .14 for the most recent quarter. The current dividend represents about a 2.96% yield today, not a great dividend but getting better.
At this point I am on the cusp of whether CSCO should be a part of my long-term core holdings but do think that I can make some money on the option premiums. I am leaning toward trying to keep the stock if it is in the money before the Dec12 options expire.