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 $7.251.31 in dividends in my various accounts for 2010.  My year to date average monthly dividends received is currently $604.28.  The year-to-date dividends currently represent about 27.75% of my monthly investment cash flow and 1.97% return on my current basis value.

Despite BP not paying a 3^rd or 4^th quarter dividend my YTD dividends are up by $32.27 on a monthly average from last year.  I attribute the increased dividends to a few companies raising their dividends, to my purchasing additional dividend paying stocks and very importantly to special dividends by FCX and VRX this month.  VRX has announced that they do not intend to continue paying dividends and the shares were called away from me so I will not be receiving that dividend again.   Normally I would have received an additional $420 in BP dividends in August and again in November.  BP is starting to talk about paying dividends again in 2011.  If that comes to pass I am hopeful that 2011 will have even better dividend performance.  During December, I received notice of the following dividends paid in various accounts for a total of $1,173.01. 

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.

Today, 12/9/10, I BTC 2 MEE Jan11 40 Covered Calls and STO 2 MEE Jul11 Covered Calls for a net deposit of $186.91 in an IRA account.  My basis for these MEE shares is now 28.63, excluding dividends received.

I also would have liked to have roll up to a higher strike price with these trades but could not do it as a net credit transaction and I am not currently interested in trading current cash flow for a higher future strike price.  Maybe I can roll it up in July if the price stays above my new strike price.

This trade provides a 3.16% simple yield and an annualized 5.28% yield on my basis.  This return is a little less than my average ROI which currently runs around 6.33.  MEE goes ex-dividend next week and with the current market price well above my strike price I anticipated that the shares might be called away so somebody could capture the dividend, as small as it is.  I was just about ready to let it be called away and then decided to go ahead and roll it out again to capture the dividend myself.  With any luck MEE will once again fall below my current strike price allowing them to expire and allowing me to once again sell new Covered Calls on it.  With a beta of 2.1 MEE might just do that.

MEE pays a small dividend of 6 cents per quarter which translates to an annualized return of .81% on my basis of $29.57 at the last payout.  As I continue to decrease my basis the return will increase but it will be sometime before it approaches my target threshold of 4%.  Even so, I continue to hold MEE for the combined dividends and option 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 $4,921.90 in dividends in my various accounts for 2010.  My year to date average monthly dividends received is currently $546.88.  The year-to-date dividends currently represent about 24.68% of my monthly investment cash flow and 1.84% return on my current basis value.

My YTD dividends are down from last year because of the BP decision to not pay a 3^rd quarter dividend as a result of the Gulf oil spill.  Normally I would have received an additional $420 in BP dividends in August.  BP will also not pay its regular dividend in November which will be another $420 hit.  On the plus side, BP is starting to talk about paying dividends again in 2011.  During September, I have received notice of the following dividends paid in various accounts for a total of $379.26. 

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.

The 36 BAC shares are one I received with BAC acquired CountryWide Mortgage.  The high basis represents my basis in CountryWide at the time of the acquisition.  I should probably just sell these shares so I can quit explaining the absurd basis. 

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.