SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Dividend investing for retirement
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: robert b furman who wrote (30313)1/13/2019 11:16:53 PM
From: spindr00  Read Replies (2) of 34328
 
I don't get the fascination with dividends. Becoming entitled to one on the ex-div date doesn't provide Total Return. If it's a non sheltered account, you're paying taxes for the privilege of receiving some of your own money back. AT&T is a good example of that. If bought it one year ago, you received $2.01 per share in dividends while share price dropped $5.61 for a net loss of $3.60 per share (or $3.66 per share if you reinvested the dividends). And that's before taxation.

OTOH, the premium from selling puts (or the equivalent Buy/Write strategy) provides a premium credit to your account which is yours to keep, regardless of what share price does. It also lowers your cash at risk basis and will never do worse than owning the underlying.

FWIW, if you're willing to forego the put/covered call premium and you would like to goose the return on a long stock position, consider a Repair Strategy... even though it's technically not a repair if you're not underwater. Sell a 1x2 ratio spread against each 100 long shares. All short calls are covered.

For example, with XOM closing at $71.72 , a March 22nd XOM 1x2 $70/$72.50 ratio would net you $75.42 if XOM is over $72.50 at expiration. That's $3.70 of gain on a 78 cent up move. And that's not even counting the 82 cent dividend in early February which you may or may not get (early assignment if deep ITM?).
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News