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 five months in the books I continue to hope 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. 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. May turned out as expected with dividend income greater than last year and option income below May 2011. Option premiums were down 34.56% while dividends received were up at 66.90% over the prior year. Dividend income was higher for several reasons: some companies raised their dividend, I own additional shares of some and some companies paid in a different month. I believe option premiums were down partly because of the market being down which means that I did not need to roll out as many Covered Call contracts that expire in June or July as I did last year. That should benefit the next few months.
Looking ahead, it appears that dividend income for June will be about $175 less than I received last year. It appears that option income will be quite a bit lower than the comparable month last year. June 2012 was my best month for option cash flow since December of 2008 and will be virtually impossible to match this year.
I still expect that I will meet each of my goals again by the end of June. The good progress YTD will help mitigate a potentially poor June.
I strongly suspect that one reason that my option income will be down is that I have rolled a number of contracts out to Jan13 or Jan14 for one reason or another (mostly because the market and my stocks had been increasing in value faster than I anticipated). That reduces my opportunity to capture more frequent option income thereby reducing monthly option income. Another reason has been the general market drop, which has caused my trading strategy of buying stocks and selling just out of the money Covered Calls to create a quick turn to fail miserably. Most of those trades have recently turned into months instead of a few weeks.