August 2014 Income
While I only have three stocks that pay their dividends in August, all three pay well and make up a large portion of my portfolio. Last August I made $117.04. This August I received a total of $233.74, a increase of 99%. This amount brings the year total up to $1344.80, which is more than the total I received in all of 2013.
Options: Options have also treated me well this month. I bought to close put options on WFM for a profit of $28.93, COH for a profit of $37.93, CREE for a profit of $22.93, UAL for a profit of $34.93 (in less than three days!), CRM for a profit of $34.93 (in 7 days), and ANF for a profit of $42.93 (in 11 days). I also had a CSCO covered call expire worthless allowing me to keep the entire profit of $52.29. Altogether, I collected $254.87 in option income. I am still down for the year (-$298.53) but am slowly working my way back to positive territory. The losses completely stem from vertical credit spreads that moved against me. Maybe I’m dealing with recency bias, but I’ve stayed away from those types of options and have done great since.
While I have branched into options, I am not straying from a dividend growth investing goal. While the power of dividends will be really evident a few years from now, I have been investing using this approach (since 2011) long enough that I can already see the amazing compounding effects in play. Since I am young, I will be using options for some more speculative stocks and in order to supplement income.
Options are incredibly powerful, though. To see what I mean, consider this: In order to make $254 in dividends at a 3% annual yield, it would take $8466 invested for an entire year. To make $212 in a quarter I would need $33866. And, to make $254 in a month I would need $101600. My entire options trading account is only worth about $7000 right now; it was with that account that I made the $254. I didn’t even need to risk the entire amount! So, I’ll continue to sell at least two put options a month (more if I can close them early). The profit from these options will be collected and ultimately used to purchase dividend stocks.
|Symbol||Dividend Amount||Shares Bought||@ Price|
I decided to collect the dividends as cash from KMI and O this month. Since I maxed out my IRA contribution already for the tax year, I wanted some free cash in order to have more leeway in managing future options. Dividend reinvestment has subsequently been turned back on for these stocks.
Total dividends for August 2014: $233.74
Total cumulative dividend income for 2014: $1344.80
Forward 12-Month Dividends: $2578.95
Total option income for August 2014: $254.87
Total cumulative option income for 2014: -$298.53
Full disclosure: Long all the above stocks