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 $1,096.51 in dividends in my various accounts for 2012.  My year to date average monthly dividends received is currently $1,096.51.  The year-to-date dividends currently represent about 27.41% of my average monthly investment cash flow and about 2.98% return on my current basis value.

My YTD dividends are up by $308.60 on a monthly average from last year.  That represents a 39.17% 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 January, I received notice of the following dividends paid in various accounts for a total of $1.096.51.

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.

ANH, MFA and NLY are mortgage REITs that make their money on interest rate spreads.  Their current high annualized dividend yields on my basis are probably at risk when the Fed begins to raise its discount rates.  As of this writing, my current basis, excluding dividends, for some of these stocks is now below their current market price, which increases my yield on those stocks.  From time to time, I attempt to sell Covered Calls on these stocks to reduce my basis, which, to some extent, will help mitigate any possible future reduction in their dividend payouts.  I find myself just holding some of these stocks while I wait for their price to rise to a point that I am comfortable selling new Covered Calls.  If I do not sell new Covered Calls I am content to capture the nice dividend for an indefinite period.  Notably, PGF, NLY, ANH and MFA fall into this category.

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 $8,154.06 in dividends in my various accounts for 2011.  My year to date average monthly dividends received is currently $741.28.  The year-to-date dividends currently represent about 31.00% of my average monthly investment cash flow and about 2.24% return on my current basis value.

My YTD dividends are up by $137.00 on a monthly average from last year.  That represents a 22.67% 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 $1,305.59.

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.

ANH, MFA and NLY are mortgage REITs that make their money on interest rate spreads.  Their current high annualized dividend yields on my basis are probably at risk when the Fed begins to raise its discount rates.  As of this writing, my current basis, excluding dividends, for some of these stocks is now below their current market price, which increases my yield on those stocks.  I attempt to sell Covered Calls on these stocks to reduce my basis which, to some extent, will help mitigate any possible future reduction in their dividend payouts.  I find myself just holding some of these stocks sometimes while I wait for their price to rise to a point that I am comfortable selling new Covered Calls.  If I do not sell new Covered Calls I am content to capture the nice dividend for an indefinite period.  Notably, PGF, NLY, ANH and MFA fall into this category.

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, 9/22/11, I BTC 2 CCJ Jan13 $30 Covered Calls and STO 2 Mar12 $21 Covered Calls for a net deposit of $66.97 in an IRA account.  My basis for these CCJ shares is now $28.34, excluding dividends received.  This transaction represents a simple return of about 1.17% and an annualized return of about 2.38% on my prior basis, if held to expiration.

With stock prices falling so much again I have been reviewing my open Covered Call positions looking for opportunities to roll them in and/or down to generate some additional cash flow.  CCJ presented just such an opportunity.  In this case I was able to decrease the strike price by $9 and move the expiration in to March 2012 although I did decrease the strike price below my basis.  With the general concerns regarding nuclear power generation and the market unease I believe this is a risk worth taking.

On the other hand, I wrote the following just a month ago when I seemed to have had a different feeling about CCJ:

“Earlier this year I had thought about letting my CCJ shares be called away because it does not pay a very good dividend and I would realize a fair profit over my basis.  I would then have redeployed the cash into other, higher dividend paying stocks.  Then I started looking at the cash flow I could receive if I simply rolled out the options and, perhaps more importantly, I was reminded that CCJ has once again raised its dividend.  The current dividend is 10 cents per share, up from a previous 7 cents per share.  Now, 10 cents per share on a $20 stock is not a dividend to write home about but the increasing dividend amounts does catch my attention.  This is the highest dividend that CCJ has ever paid and I think suggests that the company has a good opinion of its future.”

As I mentioned above, CCJ does pay a dividend even though it has not been particularly attractive.  There has been a record of increasing dividends though.  They paid out five cents per quarter for most of 2009, raising the dividend to six cents in the fourth quarter and then to seven cents in April 2010 and ten cents in March 2011.

The 6 Yahoo Finance Analyst have a 12 month price opinion of $32.77, up a little from $32.51 last month, with an average recommendation of 2.3, where 1.0 is a Strong Buy and 5.0 is a Strong Sell.  The rating agencies that I see on E*Trade are Neutral or Avoid on their opinions of the stock.