Hi All, new to forum

[hendi_alex]

I'm probably just a marginal fit here, but am always learning and always adjusting/tweaking my investment strategies.

My main IRA portfolio is actively managed with lots of covered call writing and lots of annual turnover, but most always with over sized dividend paying stocks. My newly formed cash account (first funding spring 2012) is being constructed as a dividend machine for the long haul. All positions are taken with the idea of holding long term. However, since retired and in my mid 60's, the dividend yield is somewhat more important to me than is the dividend growth, so am striving for an average yield of about 6%. Dividend growth is really just factored in via eye balling the long term payout amount. My intention is to not spend our social security directly, but rather to place nearly 100% of those checks into to the cash account, and to only spend the income that gets generated there. Over time, fresh funding plus dividend growth should help offset the effects of inflation on our overall income.

Long term income portfolio, about equally weighted:
CSG KMP MCY O ORI POT RDS.B SSL TGP

Main IRA account with weighting of larger positions: AAPL (10%) CCJ (8%) CSCO (7%) ECA (7%) EWZ GE (8%) GLOG INTC (13%) NAT PBA

Everything in the IRA is currently covering calls except half of ECA, GLOG, 1/3 of NAT, and PBA. The calls brought in $9369 and have calls dates between October and April. The call income provides quite a boost, usually doubling or tripling the dividend payout. Problem is, in a rising market, the positions keep getting called and obviously some capital gains are lost. For this reason, I'll not sell any calls against long term positions.

I'm currently about 30%-32% cash. About a third of the cash is waiting for deployment when some short term opportunity arises, 1/3 is available for distribution this January, and 1/3 is available for deployment during the next black swan event.

I'll visit here for a while to see whether my interests and the board's interests represent a decent fit. For me it is mostly about income generation with secondary emphasis on longer term growth.

[TomK]

Hello hendi_alex! I, for one, hope you find it valuable being here and that you do stick around. I think it helps the discussion to have people with different viewpoints and different strategies.

Can you explain a little more what you mean when you say that you manage your main portfolio actively with a lot of turnover? Are you momentum trading? Or does your particular covered call strategy result in many of your shares being called away?

And with respect to your cash account, I'd say you are a fine fit here. We've had a couple of good conversations about dividend growth versus dividend yield. Clearly which you prefer depends a lot on where you are in your investing career. Makes perfect sense to emphasize current yield if you are already in retirement, even if you still want some growth to offset inflation. Congrats on retirement, by the way!

[hendi_alex]

My covered calls usually go out about six months, and most turnover has resulted from exercised calls. If all of my calls ended today, about 50% of my long positions would get taken out. Over the past year some turnover has also resulted from anticipating fed moves and just being generally nervous. A good amount of my current cash allocation is from trimming down interest rate sensitive holdings like BDC's, REITs, and utilities.

[Kerim]

Welcome to the forum hendi_alex! Very glad to have you join us, and I second Tom's sentiment that, marginal fit or otherwise, I hope you find it worthwhile to stay.

I've been considering starting a thread or area devoted to discussing options strategies, and it sounds like you could provide a lot of useful experience. I know a lot of dividend investors use covered calls to improve their returns. I've always been intrigued by the idea, but ultimately afraid of it. I'm sure the math supports the approach (at least if executed properly), but I guess I'm attached to the idea of holding my DG stocks for decades, and would be nervous or upset at the prospect of having them called away.

Cash-secured puts, on the other hand, seem to fit my personality perfectly. As long as you have the cash to make a purchase at a price that you'd be happy with, you can get paid to wait for that price to arrive, if it ever does.

Would love to hear more details about your strategy. How do you choose which stocks to sell covered calls on? And how do you choose which calls to sell?

[ronn38]

Welcome Alex!

[Ok Red]

Good idea to add an Options thread, Kerim! Lots of ground to cover there and I'd love to learn more!

[ChadR]

Welcome. Using cash secured puts will get you a better rate on your cash and it can get you back into some of your sold positions at hopefully better prices. This is what I use. In this rising market none of my recent puts have been exercised, but the nice thing is that I getting an stream. And I would also enjoy the options thread Kermin.

[hendi_alex]

With the market being so uncertain, I've been focusing on plays that will generate at least 10% cash flow between dividends and call prices, generally over a six month period. GE generates a bit less, but also IMO carries a bit less risk. INTC been a cash flow hog with its nice dividend and very rich call contract prices. Going further out on the risk scale, AAPL, CCJ, and ECA have provided very nice cash flow, as the call contracts are so rich. I really just sold calls on the AAPL in order to generate some extra cash flow while hoping that calls would take the position out, as I've not been very happy with AAPL management or share price action since accumulating the shares.

I usually ladder in with a few hundred shares at a time, choosing different out of the money strikes and different call dates. The duration is usually picked to give cash flow at least equal to 2X the amount of anticipated dividends. Over the past year, buy and hold would have generally done better, but as part of my defensive strategy, I'm pleased with the results generated by call writing. The portfolio has generated very good cash flow, and has tended to be much less volatile than the general market.

[Kerim]

Thanks guys. Just added a separate options area -- have at it!

Kerim