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 $4.476.52 in dividends in my various accounts for 2010.  My year to date average monthly dividends received is currently $559.52.  The year-to-date dividends currently represent 28.80% of my monthly investment cash flow and 1.82% return on my current basis value.

So far during August, I have received notice of the following dividends paid in various accounts for a total of $189.00:

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.

Yesterday 5/24/10, I sold 2 BMY Sep10 25 Calls for a net deposit of $124.46 an IRA account.  My basis for these BMY shares is now 23.83, excluding dividends received.

I would prefer to have sold Jul10 Calls but I will be on vacation in Alaska when July options expire and I want to be able to take some corrective action if they are in danger of being called away.  I think of BMY as part of my core holding because of its good return (5.27% on my basis when last received on 5/3/10) and for the extra income I can receive from selling Covered Calls.

I sold the 25 strike price this time rather than the 28 strike price I sold last time.  I decided to go ahead and sell the 25 strike this time because, if BMY is called away, I would still make a profit on my basis.  But, as I said above, I do not really want it called away.  With the market trending down I just decided that the 25 strike would be a reasonable risk and it generated a greater option premium.

Many of the stocks that I own and write Covered Calls upon also pay dividends.  Dividends happen on a regular basis and add significantly to my annual investment income.  Year to date I have received a total of $2,781.34 in dividends in my various accounts for 2010.  My year to date average monthly dividends received is currently $556.27.

I received notice of the following dividends paid in various IRA accounts for a total of $204.00: 

I use my basis per share, excluding dividends, 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.