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 $6,060.45 in dividends in my various accounts for 2011.  My year to date average monthly dividends received is currently $757.56.  The year-to-date dividends currently represent about 27.04% of my average monthly investment cash flow and about 2.10% return on my current basis value.

My YTD dividends are up by $153.28 on a monthly average from last year.  That represents a 25.37% increase to date year over year.  I attribute the increased dividends to a few companies raising their dividends and to my purchasing additional dividend paying stocks.  During August, I received notice of the following dividends paid in various accounts for a total of $410.29. 

 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 DCIX shares are ones I received as a split off from Diana Shipping (DSX).  I had thought about just selling them but there are so few and the trading cost would chew up so much relative to what I would receive that I decided to keep them, at least for now, and collect the little dividends that they throw off.

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 $3,472.67 in dividends in my various accounts for 2011. My year to date average monthly dividends received is currently $694.53. The year-to-date dividends currently represent about 27.79% of my average monthly investment cash flow and about 2.03% return on my current basis value.

My YTD dividends are up by $90.26 on a monthly average from last year. That represents a 14.94% increase to date year over year. I attribute the increased dividends to a few companies raising their dividends and to my purchasing additional dividend paying stocks. During May, I received notice of the following dividends paid in various accounts for a total of $349.16. May is typically one of the lower months for dividend payouts, at least in my portfolio.

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.

Today, 3/18/11, I BTC 2 BMY Mar11 25 Covered Calls, bought 100 shares and Sold 3 BMY Jan12 27.50 Covered Calls for a net deposit of $94.19 in option premium in an IRA account.  My basis for these BMY shares is now 23.67, excluding dividends received.  These transactions represent about a 1.26% simple return and an annualized return of about 2.51% on my prior basis.

BMY has been above $25 since late July 2010.  I rolled out to the Mar calls last September thinking that BMY might fall back below 25.  I thought a few days ago that I might be right but then the market rallied.  My basis is below the $25 strike price so I could have let it be called away and made a profit.  However, BMY pays a pretty good dividend of 33 cents (up 1 cent from last quarter) or at about 5.13% at its current price and about 5.58% on my basis for the next dividend payment.  I consider BMY as part of my core holdings and prefer to continue holding it for the dividends and the extra revenue from the option premiums.  At this time I intend to continue rolling out these Covered Calls as long as I can and perhaps roll them up to a higher strike price as necessary if I can do so as a net credit transaction.

S&P continues to have a 12 month price target on BMY of $30 and but has decreased its rating to a 3 star hold from a 4 star Buy rating.  MarketEdge has increased its price opinion to 25.43 from 25.57 and has the decreased it rating to the equivalent of a Hold from the previous Buy rating for BMY.  The YAHOO analysts have a 12 month price target of 27.25 with a 2.4 rating (where 1.0 is a Strong Buy and 5.0 is a Strong Sell) which is a .1 increase from last week.  There seems to be some consensus that BMY is no longer as strong of a buy as it has been.