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 $3,898.29 in dividends in my various accounts.  My year to date average monthly dividends received is currently $974.57.  The year-to-date dividends currently represent about 32.69% of my average monthly investment cash flow and about 2.57% return on my current basis value.

My YTD dividends are up by $186.66 on a monthly average from last year.  That represents a 23.69% 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 April, I received notice of the following dividends paid in various accounts for a total of $1,195.28.

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.

My 10 WFC Feb12 $31 Calls (in six accounts) were in the money by .09 as the option period closed and were all called away from me.  I realized a net profit of about $375 during the four weeks that I held the shares.  I held the shares prior to their ex-dividend date so I will also collect and additional $120 in dividends on 3/1/12.

I now need to decide what to do with the new cash in my accounts.  At this time I am inclined to sell the $31 weekly puts expiring next Friday, 2/24/12.  I am also considering some of the other stocks for which weekly options are offered.  Some potential candidates are GE, CSCO, HPQ, INTC and T.  All of these companies also pay a dividend and are currently in the right price range for my accounts.  In fact, GE goes ex-dividend next week on 2/23 and I just might outright purchase the stock to capture the dividend.  The down side to purchasing the stock is that I will then need to go out to March or even April to get a decent net return after trading costs.   I will make a decision on Tuesday morning as I see how the markets start the day.

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.