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.

Today, 1/4/12, I BTC 2 RYL Jan12 $12.50 Covered Calls, bought 100 shares of RYL at $16.3892, and STO 3 RYL Jan13 $15 Covered Calls for a net premium deposit of $268.20 in an IRA account.  My basis for these RYL shares is now $23.41, excluding dividends received.  This transaction represents a simple return of about 3.67% and an annualized return of about 1.80% on my adjusted basis.

RYL has been on somewhat of a tear lately, rising almost $6 since early October and 22 cents just today.  My strike price is below my basis and is even below the price I just paid for the additional 100 shares.  RYL goes ex-dividend next week (1/11/12) and, even though its dividend is small, I am hoping that the further out expiration date will deter somebody from calling the shares away from me to collect it.  If I am called away, my current transactions will reduce my loss by almost $630 dollars, which will make them worth it. 

The 14 Yahoo! Analysts have a 1 year price target of $16.04, down from an earlier $17.81, while an average recommendation or 2.6, down from an earlier 2.3,, where 1.0 is a Strong Buy and 5.0 is a Strong Sale.

RYL continues to pay a .03 quarterly dividend, down from .12 in 2008, so it does technically satisfy my core goal of owning dividend-paying stocks.  However, that is less than 1% annually so it is not helping much to get me to my goal of 10% per year annualized return on my investment 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.