At the beginning of the year I posted some 2012 investment goals. To summarize:
- Increase my total cash flow from dividends and option premiums by a compound 8% from my base year of 2010
- Increase my dividend yield to 2.15% on my basis
- Increase my total cash flow to be 7.7% on my basis
Here are the YTD results for 2012:
I include future YTD months simply because I find it interesting to see what the results might be if I never earned another dollar. It also lets me see what I need to do in each future month as of this moment to exceed last year’s results. An explanation of some items in the results table seems appropriate.
Target: The monthly average amount to reach my 8% goal.
Target +/-: The dollar amount that I am ahead or behind my 8% goal.
Average YTD increase %: The average increase over last year-to-date.
Yield on Mkt %: The yield on the market value of my stock holdings.
Target Increase on Base: The Goal and Actual %.
Div on Basis: The Goal and Actual Div yield %.
Total Yield on Basis: The Goal and Actual % of cash flow on my basis.
Analysis of results and a look at next month:
Now with six months in the books I believe I am seeing a pattern that suggests I was too conservative when setting my goals for the year. We will see if the pattern continues for another month. On the other hand, it is better to be conservative when estimating future revenue. I would rather have more money that expected than less. For the second month in a row, the only goal that I am short of this month is the total cash flow as a percentage of my basis.
I am currently ahead of my target average monthly cash flow for the year. June turned out better than expected with both dividend and option income below June 2011. Option premiums were down 54.48% while dividends received were down 16.35% over the prior year. Dividend income was lower primarily because last year I received a special dividend from Massey Energy as part of it acquisition by ANR. FCX also paid a large dividend last year and nothing this June. I believe option premiums were down mostly because of I had did not have has many options expiring in June this year which meant that I had fewer new options to write. That should benefit the next few months.
Looking ahead, it appears that dividend income for June will be about the same that I received last year. It appears that option income will be about twice the comparable month last year. Part of the reason for the greater option income will be because of the greater number of anticipated expirations in July and subsequent writing of new contracts.
I still expect that I will meet each of my goals again by the end of July. The good progress YTD will help mitigate any potentially poor future month.