More on that fuzzy dividend feeling

[hendi_alex]

$1370 in dividends hit the pot YTD and 16 more dividends will hit in March and April. During the same period $4905 net call income hit the pot. The total comes to $6275. Not too shabby cash flow from a sub $300K account! Over half of the current calls will play out by expiration in April, and that will allow for yet another round of call selling.

[rnsmth]

(03-06-2014, 04:13 PM)hendi_alex Wrote: $1370 in dividends hit the pot YTD and 16 more dividends will hit in March and April. During the same period $4905 net call income hit the pot. The total comes to $6275. Not too shabby cash flow from a sub $300K account! Over half of the current calls will play out by expiration in April, and that will allow for yet another round of call selling.

Congrats!

[hendi_alex]

The cash flow comes at a cost of usually under performing the market, especially a rising market. If the cash flow was the only part of the equation, I would be dancing for joy. Still, since both cash flow and defense are my top priorities, this combination of strategies is taking care of current needs and objectives. I'm hoping that dividends and covered call plays will replace the $31K that we took as a distribution for this year. We recouped $32K in distributions last year, but last year was an easy year, one that most anyone should have made double digit gains. So far, on paper, we have recovered $5400 of our $31K 2014 distribution. Still a long way to go with lots of uncertainty for the ten months ahead.

[cannew]

Two months of 2014 provided $13,246.11 of dividends. Expect to be over 70k by year end. Do dividends really matter?

[hendi_alex]

If the nest egg is great enough such that dividends cover needs, IMO one is very fortunate. Our basic needs are covered by pension and social security and the portfolio takes care of big ticket discretionary spending. In the current environment, dividends alone fall short of the $22k-$25k that I expect the account to generate.

[rnsmth]

Our pensions and SS are going to be plenty cover living expenses. Dividend income currently is 10% of our total income and is getting reinvested. In addition to that it is looking like we will be able to save / invest 10% of our non dividend income. At the current ages of 62 and 59, that should set the table nicely for our 70's.

If we like Merida, Yucatán as much in a few years as we do now, we'll take on a building or renovation project that will include caretaker quarters for when and if we get really old

[cannew]

For us without pensions, other than gov't pension, we need a better plan and one which will provide a growing income, to offset inflation.

[rnsmth]

(03-07-2014, 09:26 AM)cannew Wrote: For us without pensions, other than gov't pension, we need a better plan and one which will provide a growing income, to offset inflation.

By gov't pension, do you mean solely Social Security? (if you are in the US).

[hendi_alex]

We have some projects and debt that will mostly derail our plan this year, but starting in the second half of this year and into 2015, we plan to place our social security checks into the investment account, and limit withdrawals to the dividend stream that is produced. I'm thinking that between dividend increases and the flow of new funding, that the growing dividend stream will help offset inflation. Of course our pension is indexed to inflation, so that will act as a partial offset to inflation. I agree with rnsmith's savings strategy, and feel that retired individuals should continue to save at least 10% of cash flow. That way the income should both last a lifetime plus should also stay ahead of moderate levels of inflation.

I managed to save all of last year's social security checks, but this year will only save about 50% at best. Next year, hopefully that will move up to about 75%-80% which will be slightly in excess of after tax net.

[cannew]

(03-07-2014, 09:40 AM)rnsmth Wrote:

(03-07-2014, 09:26 AM)cannew Wrote: For us without pensions, other than gov't pension, we need a better plan and one which will provide a growing income, to offset inflation.

By gov't pension, do you mean solely Social Security? (if you are in the US).

Canadian and we get CPP (Canada Pension Plan)& OAS (Old Age Security), the two would match your SS. The average gov't pension is about $1,150 per month.

[rnsmth]

(03-07-2014, 09:50 AM)cannew Wrote:

(03-07-2014, 09:40 AM)rnsmth Wrote:

(03-07-2014, 09:26 AM)cannew Wrote: For us without pensions, other than gov't pension, we need a better plan and one which will provide a growing income, to offset inflation.

By gov't pension, do you mean solely Social Security? (if you are in the US).

Canadian and we get CPP (Canada Pension Plan)& OAS (Old Age Security), the two would match your SS. The average gov't pension is about $1,150 per month.

Thanks for the answer - I do not know what the average for SS is, but that is close to what Kathy and I each get. I started mine at 62, Kathy worked part time for the past decade and is now legally blind from a genetic retinal disorder. She is 59 and receiving SS disability.