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Strategies & Market Trends : cash flow investing for retirement
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From: tyc:>7/21/2011 4:55:39 PM
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Further illustrating a strategy:

In my US$ margin account I have shares of Excellon (EXC) which pay a 6% dividend. In keeping with "Dividend Investing for Retirement" principles the dividends are compounded by DRIP.

I also have eight covered calls of TC which pays no dividend. The sale proceeds of both the June ($10 strike) calls and the similar proceeds of the August expiry calls were immediately invested to buy shares of EXC.

If/when the calls are exercised and the TC stock called away, I shall use the proceeds plus any small margin to repurchase TC.... thus the yield of EXC will be compounded by monthly call sales of TC as well as by the DRIP of the quarterly dividend.

Of course, all cash flow need not be reinvested. It could be spent as required.
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