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, 10/3/11, I BTC 2 RYL Jan12 $20 Covered Calls and STO 2 RYL Jan12 $12.50 Covered Calls for a net deposit of $112.97 in an IRA account.  My basis for these RYL shares is now 28.26, excluding dividends received.  This transaction represents a simple return of about 1.96% and an annualized return of about 5.81%.

With the market trading down I once again reviewed my outstanding Covered Call contracts looking for opportunities to roll down some strike prices.  RYL is another of the opportunities I found.  Starting in mid July it began to nose dive.  With only 123 days to Jan12 expiration I felt comfortable in rolling my Call contracts down to capture some additional option premium.  With my basis at $28.26 I am certainly not interested in it being called away if I am wrong here so I will continue to monitor and roll out and hopefully up if RYL moves up near my new strike price.

The 13 Yahoo! Analysts have a 1 year price target of $17.81, down from an earlier $19.77, while continuing an average recommendation or 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 or my goal of 30% of cash flow from dividends.

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.