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.

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 $5,898.16 in dividends in my various accounts for 2011.  My year to date average monthly dividends received is currently $807.17.  The year-to-date dividends currently represent about 29.55% of my average monthly investment cash flow and about 2.28% return on my current basis value.

My YTD dividends are up by $202.89 on a monthly average from last year.  That represents a 33.58% 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 July, I received notice of the following dividends paid in various accounts for a total of $1.152.32.

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 many 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, 6/7/11, I bought to close (BTC) 10 GE Jun11 18 Covered Calls and sold to open (STO) 10 GE Jan13 20 Covered Calls for a net deposit of $860.86 in 5 IRA accounts.  My adjusted basis for these GE shares now ranges from 7.18 to 9.12, excluding dividends received.  These transactions represent simple returns ranging from 8.56 to 10.17% and annualized returns ranging from 5.26% to 6.27% on my prior basis.

I made these transactions today for two reasons.  GE goes Ex-Dividend next week on 6/16 and because I had the opportunity to roll the strike price up two dollars.  GE has been falling along with the rest of the market for the past several days.  I was watching it fall with the hope that it would actually fall below my Jun 18 strike.  When the market and GE started back up this morning I decided it was time to roll the options out while I could still do so at a new, higher strike price.  I note that I wrote last December that I expected to roll these Calls out and anticipated being able to roll them up as well.

S&P rates GE as a Buy with a 12 month price target of $24, up from a previous $20 when I last looked in December.  Market Edge Second Opinion has an Avoid recommendation down from the Neutral Rating last December, with a price opinion of 18.82, up from 16.78 last December.  Market Edge seems to be consistently low in its price targets.  Looking at Yahoo I see that the analysts they report have a mean price target of 24.08, up from the 20.71 last December, with a range of 21 to 30 and a recommendation of 2.1 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

GE pays a good dividend at about 3.22% on its current price for the next payout in July.  My basis is well below the current price which will result in dividend returns ranging from 6.58% to 8.36% on my basis in July.  Better news is that GE has increased its dividend again to 15 cents for the next payout in July11.  This will be the third dividend increase in the past 12 months.  I look forward to the day when GE again pays 31 cents per share as it did as recently as January 2009.  As you may have guessed, I consider GE as part of my long term core holdings and will hold onto them as long as I can to continue collecting the dividends and option premiums.