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 $2.540.58 in dividends in my various accounts.  My year to date average monthly dividends received is currently $845.86.

My YTD dividends are down by $69.93 on a monthly average from last year.  That represents a 7.63% decrease to date year over year.  Although down, this is an improvement over last month.  I attribute the decreased average dividends to several of my dividend paying stocks being called away in the past few months.  During March, I received notice of the following dividends paid in various accounts for a total of $1,015.66.

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.

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, 2/19/13, I bought 100 shares of BAC.  I then BTC 9 BAC May13 $10.00 Covered Calls and STO 10 BAC Jan15 $12 Covered Calls for a net deposit of $148.38 in an IRA account.  My basis for these BAC shares is now $14.99, excluding dividends received.  This transaction represents a simple return of about .91% and an annualized return of about .47% with 697 days to expiration.  Including the increase in the strike price the simple return is about 14.12% and the annualized return to about 7.40%.

I have been thinking about this for a number of days.  BAC goes ex-dividend next week on 2/27/13.  The dividend is only .01 but I felt far enough in the money that thought somebody might decide to call me away anyway.  I could have just rolled the Calls out at the same strike price but decided to go ahead and lower my basis and pick up most of an additional $1800 on the existing shares if somebody does take the shares.

BAC currently pays a paltry .01 quarterly dividend.  It has paid a .64 quarterly dividend as recently as September 2008.  I believe that BAC will eventually raise its dividend again.  I don’t know if it will be back to the .64 level but certainly it should be well above what it is now.  I continue to believe that BAC will be a winner for me one day unless I am called away sooner.

S&P currently has a 12-month target of $13 for BAC and a Hold recommendation.  MarketEdge has a price opinion of $7.74 and a Long recommendation.  The 27 Yahoo Analysts currently have a 12-month price target of $12.49 and a recommendation of 2.7 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

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 $11,001.52 in dividends in my various accounts.  My year to date average monthly dividends received is currently $916.79. 

My YTD dividends are up by $128.89 on a monthly average from last year.  That represents a 16.36% increase to date year over year.  I attribute the increased average dividends to a few companies raising their dividends and to my purchasing additional dividend paying stocks.  During November, I received notice of the following dividends paid in various accounts for a total of $1,390.50.                            

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.

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.