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Strategies & Market Trends : Dividend investing for retirement

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berniel

To: spindr00 who wrote (30370)	1/14/2019 4:05:13 AM
From: robert b furman	1 Recommendation Read Replies (3) of 34328

Hi spindr00, In your example of T there is a loss in the past year of $5.61. That is a function of the strike price you sold the put at. I try to look at a long term chart (3-4 years lengthy - usually weekly). If I can buy the stock at that low price, then the dividend is usually a return of company earnings and not a return of my capital. In general, I sleep well, as long as price plus the dividend received that year stays above my initial net purchase.(august of 2015 price hit a low of $30.97. So a net price of 29 ish keeps my dividend a return of earnings that continues year after year. In T's current example, it got below that number,with the current low of$ 26.80. That makes it something to put on your watch list. That 30.97 previous low occurred in a down market while T was also buying Direct TV and taking ondebt for the transaction. The current purchase of Time Warner is a similar event compounded by the governments (DOJ's) antitrust case PLUS a ridiculous appeal after losing their initial trial. A very unique set of circumstances , that require watching. My bet is T will win without giving up anything and will pursue it's stated goal of debt reduction through asset sales and cashflow increases. The idea is to buy a stock at a below market price by the premium received (which is maximized by going out in time over 12 months AND it receiceives capital gains taxation rates (similar to dividends usually). If you can accomplish that ,and your net cost is close to or below the 3-4 year low - you stand a fairly good chance of getting your dividend back as a share of income and not capital returned. When buying a Dividend Aristocrat, of any other stock with a long record of steady dividend payments, there very often is excellent price support when the stocks price lowered to the point where the dividend yield approaches 5% to 6%. I think it is often the dividend mutual funds jumping in and accumulating more shares. The nice part about the dividend is it comes every year after year. Not sure on all the details with your repair strategy. Would you have to cough up 200 shares if price dropped below 70 at expiration? Good discussion. Bob

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