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 $1.277.39 in dividends in my various accounts for 2011.  My year to date average monthly dividends received is currently $638.70.  The year-to-date dividends currently represent about 25.59% of my average monthly investment cash flow and about 2.07% return on my current basis value.

My YTD dividends are up by $141.24 on a monthly average from last year.  That represents a 5.70% 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 February, I received notice of the following dividends paid in various accounts for a total of $218.77. 

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 $6.078.30 in dividends in my various accounts for 2010.  My year to date average monthly dividends received is currently $552.57.  The year-to-date dividends currently represent about 26.90% of my monthly investment cash flow and 1.94% return on my current basis value.

Despite BP not paying a 3^rd or 4^th quarter dividend my YTD dividends are only down by $21.13 on a monthly average from last year.  I attribute the otherwise increased dividends to a few companies raising their dividends and to my purchasing additional dividend paying stocks.  Normally I would have received an additional $420 in BP dividends in August and again in November.  On the plus side, BP is starting to talk about paying dividends again in 2011.  During November, I received notice of the following dividends paid in various accounts for a total of $217.50. 

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, 9/8/10, I Closed 2 BMY Sep10 25 Covered Calls and Sold 2 BMY Mar11 25 Covered Calls for a net deposit of $150.95 in an IRA account.  My basis for these BMY shares is now 23.07, excluding dividends received.  These transactions represent about a 3.17% simple return and an annualized return of about 6.04% on my prior basis.

BMY has been above $25 since late July.  I originally sold the Sep calls in May thinking that BMY might stay below that level.  Obviously I was wrong.  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 32 cents or at about 4.79% at its current price and about 5.37% on my basis at the last dividend payout in August.  I prefer to continue holding BMY 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 if I can do so as a net credit transaction.

S&P currently has a 12 month price target on BMY of $30 and a 4 star Buy rating.  MarketEdge has a price opinion of 25.57 and has the equivalent of a Buy rating for BMY.  In fact, as I scan the recommendations of the various analysts available to me, they all have the equivalent of a Buy rating on BMY.  Now, I suppose that might be a bearish signal for a contrarian.  But I guess I am not very concerned with that as long as I continue to receive a decent return on my investment via the dividends and potentially opinion premiums.