Today, 2/2/12, BTC 1 C Feb12 $32 Covered Call and sold 1 C Apr12 $34 Covered Call for a net deposit of $34.49 in an IRA account.  My basis for these C shares is now $32.93, excluding dividends received.  This transaction represents a simple return of about 1.03% and an annualized return of about 4.78%, if held to maturity.

At this point, I am glad I did not just sell the 40 shares I owned last month.  I may be being a little greedy here but I am happy to need to roll out and up my Calls on C.  Rather than take a loss last month I am now in a position where I will actually make a capital gain if my C shares are called away.

S&P continues a 12-month target of $35 for C with a 3 star (Hold) rating.  MarketEdge currently has a price opinion of $30.87 and a Long rating, up from $26.31 with a Neutral rating last week.  The 22 Yahoo Analysts have a mean 12-month estimate of $40.77, up slightly from last week, and a mean recommendation of 2.3 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

C resumed dividend payouts in May 2011 at one cent per quarter.  Prior to that, it last paid a ten cent dividend in January 2009.  I am not considering C as a long term core stock but I still stand to make a reasonable profit just on the Covered Call premiums.

Today, 1/26/12, I bought 60 C at a net cost of $30.78 per share to increase my holdings to 100 shares.  I then sold 1 C Feb12 $32 Covered Call for a net deposit of $48.24 in an IRA account.  My basis for these C shares is now $33.27, excluding dividends received.  This transaction represents a simple return of about 1.43% and an annualized return of about 22.66% on my averaged down prior basis.

I had originally thought that I would sell my 40 C shares when the Covered Calls I had on them expired earlier this month.  I was prepared to take a loss and had actually placed a good-till-cancel order for them at $31.  I did a little more calculating today and, with C trading up, I decided to buy the additional 60 shares to round out the lot and start selling out of the money Covered Calls.  I explored several expiration dates out to Jan14 that would immediately make me in the money.  In the end, I decided to sell the Feb12 $32 strike with the thought that I might be able to continue selling Covered Calls for a few months.  I know that I will be able roll these Calls out and perhaps up if it appears that I sold too low a strike price.

S&P currently has a 12-month target of $35 for C with a 3 star (Hold) rating.  MarketEdge currently has a price opinion of $26.31 with a Neutral rating.  The 21 Yahoo Analysts have a mean 12-month estimate of $40.52 and a mean recommendation of 2.3 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

C resumed dividend payouts in May 2011 at one cent per quarter.  Prior to that, it last paid a ten cent dividend in January 2009.  I am not considering C as a long term core stock but I still stand to make a reasonable profit on it just on the Covered Call premiums.

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 $8,622.06 in dividends in my various accounts for 2011.  My year to date average monthly dividends received is currently $783.82.  The year-to-date dividends currently represent about 27.83% of my average monthly investment cash flow and about 2.15% return on my current basis value.

My YTD dividends are up by $179.55 on a monthly average from last year.  That represents a 29.71% 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 October, I received notice of the following dividends paid in various accounts for a total of $468.00.

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.