Yesterday, 2/8/11, I BTC 2 BA Jan12 60 Covered Calls and STO 2 BA Jan13 60 Covered Calls for a net deposit of $296.89 in an IRA account.  My basis for these BA shares is now 58.58, excluding dividends received.

This is the fifth time in a row that I have rolled out BA Covered Calls but, unlike the last time, I was not able to also roll them up to a higher strike price.  Of course I needed to extend the expiration date by one year because there are no other options available between Jan12 and Jan13.  The reason I did this roll out is because today (2/9/11) is the ex-dividend date for BA and, being way in the money I was concerned that somebody might want to call it away to realize the gain in the stock price and to capture the dividend.  I wanted to capture some additional option premium just in case and felt like the longer expiration date would help deter execution.  Unless somebody exercises today I think I may have achieved my goal.

S&P continues to have a 12 month price target of $82 and a buy rating on BA.  S&P now has an excellent track record of predicting BA price movement.  MarketEdge, with a fair track record, has increased its price opinion to $71.68 and now has a Long rating on BA.  Thomson Reuters, with an excellent track record, currently has increased it rating to a Neutral opinion on BA.

In any event, I prefer to continue to hold onto BA.  It pays a decent dividend at .42 per quarter which equates to about a 2.32% annual yield at its current market price.  Of course, my basis is below the current market price so my return is a little higher at 2.80% on the last dividends recently received in Dec10.  BA also has a history of raising its dividend.  They raised it almost on an annual basis since 2004 but have remained at the current level since March of 2009.  I have nothing to base it on but I am hopeful that they will raise the dividend this year.

Many 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 $7.251.31 in dividends in my various accounts for 2010.  My year to date average monthly dividends received is currently $604.28.  The year-to-date dividends currently represent about 27.75% of my monthly investment cash flow and 1.97% return on my current basis value.

Despite BP not paying a 3^rd or 4^th quarter dividend my YTD dividends are up by $32.27 on a monthly average from last year.  I attribute the increased dividends to a few companies raising their dividends, to my purchasing additional dividend paying stocks and very importantly to special dividends by FCX and VRX this month.  VRX has announced that they do not intend to continue paying dividends and the shares were called away from me so I will not be receiving that dividend again.   Normally I would have received an additional $420 in BP dividends in August and again in November.  BP is starting to talk about paying dividends again in 2011.  If that comes to pass I am hopeful that 2011 will have even better dividend performance.  During December, I received notice of the following dividends paid in various accounts for a total of $1,173.01. 

Please notice that PGF is an ETF and pays dividends monthly.  The annualized dividend yield for PGF is based upon the simple and false assumption that it 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 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.

Many 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 $4,921.90 in dividends in my various accounts for 2010.  My year to date average monthly dividends received is currently $546.88.  The year-to-date dividends currently represent about 24.68% of my monthly investment cash flow and 1.84% return on my current basis value.

My YTD dividends are down from last year because of the BP decision to not pay a 3^rd quarter dividend as a result of the Gulf oil spill.  Normally I would have received an additional $420 in BP dividends in August.  BP will also not pay its regular dividend in November which will be another $420 hit.  On the plus side, BP is starting to talk about paying dividends again in 2011.  During September, I have received notice of the following dividends paid in various accounts for a total of $379.26. 

Please notice that PGF is an ETF and pays dividends monthly.  The annualized dividend yield for PGF is based upon the simple and false assumption that it 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.

The 36 BAC shares are one I received with BAC acquired CountryWide Mortgage.  The high basis represents my basis in CountryWide at the time of the acquisition.  I should probably just sell these shares so I can quit explaining the absurd basis. 

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.