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 $3.938.48 in dividends in my various accounts.  My year to date average monthly dividends received is currently $984.62.

The year-to-date dividends currently represent about 23.02% of my average monthly investment cash flow and about 2.61% return on my current basis value.

My YTD dividends are up by $67.83 on a monthly average from last year.  That represents a 7.40% increase to date year over year.  This is a turn around from last month when I was down almost the same amount on the monthly average and percentage change.  I attribute the increased average dividends to my acquiring additional dividend paying stocks and working to retain some that I already own.  During April, I received notice of the following dividends paid in various accounts for a total of $1,397.90.

Please notice that PGF and PGH both pay monthly dividends.  The annualized dividend yield for the monthly dividend payers is based upon the simple and 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.

ANH, MFA and NLY are mortgage REITs that make their money on interest rate spreads.  Their current high-annualized dividend yields on my basis are probably at risk when the Fed begins to raise its discount rates.  Even without any Fed action the dividends on these stocks has recently been decreasing.  As of this writing, my current basis, excluding dividends, for some of these stocks is now below their current market price, which increases my yield on those stocks.  From time to time, I attempt to sell Covered Calls on these stocks to reduce my basis, which, to some extent, will help mitigate any possible future reduction in their dividend payouts.  I find myself just holding some of these 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.

Also, note that MFA paid a special dividend this month.  It is indicated by the green hi-lighted box in the Dividends Per Year column.

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.

Today, 3/19/13, I BTC 5 AUY Jan14 $10 Covered Calls and STO 5 AUY Jan15 $10 Covered Calls for a net deposit of $171.36 in three IRA accounts.  There are 669 days to option expiration.  The details follow:

I rolled out 1 for a net deposit of $30.48.  My basis for these AUY shares is now $8.74, excluding dividends received.  This transaction represents a simple return of about 3.37% and an annualized return of about 1.84% on my prior basis, if held to maturity.

I rolled out 1 for a net deposit of $30.48.  My basis for these AUY shares is now $9.28, excluding dividends received.  This transaction represents a simple return of about 3.18% and an annualized return of about 1.73% on my prior basis, if held to maturity.

I rolled out 3 for a net deposit of $110.40.  My basis for these AUY shares is now $10.28, excluding dividends received.  This transaction represents a simple return of about 3.46% and an annualized return of about 1.89% on my prior basis, if held to maturity.

It just now occurs to me that the “held to maturity” phrase may be significant.  Several of the option contracts that I roll out have not held to maturity.  These Calls are good examples of that.  Rolling out early means that the original annualized returns are actually higher than reported at the time.

I rolled out these Covered Calls because AUY goes ex-dividend next week, 3/26/13, and I wanted to minimize the chance that somebody will call the stock away just to collect the dividend.  I don’t really think they will but I’ve been surprised before.

AUY has not been a great stock for me.  On the other hand, I have been making a little money from it even though I would like to have a greater percentage return.  AUY pays a small dividend, currently 6.5 cents per share per quarter, which equates to a reported 1.72% yield at the current price.  The dividend has tended to move around though, including being one cent, two cents, three cents and five at various times over the past couple of years.  I owned the stock as far back as 2006.  I have collected $275 in dividends since I began tracking dividends at the beginning of 2009.  My yield is in the mid to high 2% range.

S&P does not currently have a target price or an opinion on AUY.  MarketEdge has a price opinion of $18.08 and an Avoid opinion.  The 18 YAHOO analysts have a mean 12-month price target of $22.11 and a recommendation rating of 2.0 on a scale of 1.0 for a Strong Buy and 5.0 for a Strong Sell.

I will probably continue to try to roll out my Covered Calls if I can do so for a Net Credit.  If I cannot roll out at next time, I will still have made a profit in two of my accounts and will take a small loss in the other, which will not be all that bad.

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 $857.17 in dividends in my various accounts.  My year to date average monthly dividends received is currently $857.17.  The year-to-date dividends currently represent about 19.59% of my average monthly investment cash flow and about 2.18% return on my current basis value.

My YTD dividends are down by $59.62 on a monthly average from last year.  That represents a 6.50% increase to date year over year.  I attribute the decreased average dividends several of my dividend paying stocks being called away last year.  During January, I received notice of the following dividends paid in various accounts for a total of $857.17.

Please notice that PGF and PGH both pay monthly dividends.  The annualized dividend yield for the monthly dividend payers is based upon the simple and 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.

ANH, MFA and NLY are mortgage REITs that make their money on interest rate spreads.  Their current high annualized dividend yields on my basis are probably at risk when the Fed begins to raise its discount rates.  Even without any Fed action the dividends on these stocks has recently been decreasing.  As of this writing, my current basis, excluding dividends, for some of these stocks is now below their current market price, which increases my yield on those stocks.  From time to time, I attempt to sell Covered Calls on these stocks to reduce my basis, which, to some extent, will help mitigate any possible future reduction in their dividend payouts.  I find myself just holding some of these 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 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.