September 2017 Dividend Report

In September I received the following dividends:

USD dividends ~ $44,40 / €37,59
Simon Property $7,20
Boeing $5,68
Autoliv $3,60
Johnson&Johnson $3,36
Monmouth $4,80
Bank of America $3,96
Borgwarner $1,96
McDonalds $2,82
Wisdomtree Smallcap Dividend Fund ETF $3,15
Ishares MSCI Emerging Markets UCITS ETF $7,87

EUR Dividends ~ €62,69
Unilever €3,59
Aegon €15,60
Royal dutch €7,90
Eni €16,00
Think AEX ETF €12,22
Think Global Real Estate ETF €3,63
Think Morningstar High Dividend ETF €3,75

A total of €90,26

Writing put options as a way to generate extra income, my doubts

At the start of this year I read about writing put options on stocks which I would like to have in my portfolio. The ratio behind this is that its a way to buy shares for a lower price than the current market price. This for example realized by writing options with a strike price close to the current share price. If you get assigned to buy the shares the price you pay is the strike price minus the option premium received. It’s of course also possible that at the expiry date of the option the share price is above the strike price of the put. In that case the option premium received is extra income.

Writing or going short on a put option means you sell someone the rigth to sell shares to you at a agreed price before the option expires in the agreed month. this means that I as seller of the option receives the option premium, but with the risk to buy shares at a lower price than the market price.

I did for example write 2 options Iberdrola €6,75 expirting in september 2017 at a price of 0,12 per share. Option contracts have 100 shares as underlying value so in my case I received 200 x €0,12 = €24 – €3 transaction fee = €21

If Iberdrola would be above €6,75 at te expiry date in september this €21 is extra income. If the stock price of Iberdrola would be below €6,75 I would be forced to purchase the 200 shares at the agreed price of €6.75. The net purchase price in this case would be €6,75 – €0,21 = €6,54. When I sold the options the stock price of Iberdrola was €6,87. Techincally this means that in July I ‘signed’ a contract to receive €21 or to buy Iberdrola shares with a 4,8% discount compared to the stock price in July.

In my eyes I would be happy with both. Receiving the option premium as a way to generate extra income would be fine to me, but getting forced to buy the shares of Iberdrola would also be fine to me, because its a position I want to increase in the near future.

When the options expired at the 3rd friday in september the stock price of Iberdrola closed at €6,729. This was below the strike price of €6,75 and I was ‘forced’ to buy the shares at €6,75. No harm done, because of the option premium I received my net purchase price was €6,54 so I increased my position in Iberdrola with 200 shares as I already planned today.

The only thing which is bothering me is that on the next monday after I got assigned the shares of Iberdrola the stock price increased and I decided to sell them at €6,781.

Selling 200 Iberdrola shares 1.356,20
Purchase 200 Iberdrola shares -1.350,00
Received option premium 24,00
Transaction fee options -3,00
Transaction fee option expiry -2,00

Profit 25,20

After closing the position I did go short on 2 options Iberdrola again. Again with a strike price of €6,75 but with an expiry date in march 2018. I received a premium of 0,40 per share and received after deduction of transaction costs €77 as extra income. I was happy to again be able to write options on a position i wanted to increase and generate income again.

After some days I only started to doubt my decission. In my eyes I’m not making a decission as value investor, but its more a speculative decission to write options. This is because I didn’t stick to my original plan to write options and keep the shares if I would be assigned at the expiry date, but sold them to again write put options for extra income while investing my monthly deposit in other shares instead using it to fund the Iberdrola purchase.

I will monitor myself (I hope) the next few months to see how I will act if I’m again assigned to buy shares.

Purchase of 10 shares Royal Bank of Canada

Today I bought 10 shares of Royal Bank of Canada against $76,23.

Royal Bank of Canada is paying a quarterly dividend of $0,724 per share. With this purchase I’m adding $28,96 to my yearly expected dividend payments. The expected yield will be 3,8%.

The average dividend growth rate of Royal Bank of Canada is 9,7% over the last 5 years. With a payout ratio of 46% I expect it’s possible to maintain dividend growth in the near future.

It’s hard to make an estimation on the interest rate trend, but I expect the interest rates to increase in the near future as a result of the changing monetary policy of the federal reserve. The federeal reserve announced the plan to stop buying bonds on the open market and start selling bonds they own. This could result in higher interest rates, because investors could buy the bonds sold by the FED. As a result less money is available to buy newly offered bonds and as a result the interest rate should increase.

As banks tends to make higher margins when the interest rate is higher I decided to increase my exposure in the financial sector by adding Royal Bank of Canada shares.

Purchase of 4 Facebook shares

Today I bought 4 facebook shares at $162,71.

Although Facebook is not paying any dividends I wanted to add a few shares to my portfolio for some time. Today Facebook is almost 5% down from $170,54 to 162,71. For me reason to buy 4 shares. I tend to have problems seeing the value in stocks like facebook with a high PE ratio and no dividend yield, but based on the return on equity of above 20% and the profit growth figures I consider this a good buy for the long term.

August 2017 Dividend Report

In August I received the following dividends:

USD dividends ~ $48,05 total / €40,36
Verizon $6,93
AbbVie $9,60
Apple $6,30
Macquarie Infrastructure $9,66
Wisdomtree Smallcap Dividend Fund ETF €1,35
Novo Nordisk $14,21

EUR Dividends ~ €20,25 total:
DSM €7,54
Iberdrola €0,71
ING Group €12,00

GBP dividends ~ GBP 14,55 total / €15,92
National Grid 14,55

A total of €76,53

July 2017 Dividend Report

In July I received the following dividends:

USD dividends ~ $14,58 total / €12,31
iShares MSCI Emerging Markets UCITS ETF (Dist) $2,33
Brown-Forman $3,65
Coresite Realty $6,30
Wisdomtree Smallcap Dividend Fund $2,30

AUD dividends ~ $28,00 / €18,74
Macquarie Group – $28,00

EUR Dividends ~ €32,60 total:
Iberdrola €3,00
Iberdrola €14,40 (+2 shares stock dividend)
Wereldhave €15,40

A total of €63,65

Purchase 15 Think AEX UCITS ETF

Today I bought 15 Think AEX UCITS ETF’s. I now hold 26 shares of this ETF. Based on the last four, quarterly, dividend payments the yield is 2,99%. With this purchase I expect to add €23,85 to my yearly dividend income. The dividend of the AEX index ETF is not that steady, because also cyclical companies are part of it so I don’t expect to see the dividends of this ETF increasing on a yearly basis.

Dividend development of the last few years:

2016: €1,59
2015: €1,13
2014: €1,11
2013: €0,92
2012: €1,17
2012: €1,10

This ETF is following the AEX index. The AEX index is consisting out of the 25 most frequently traded securities listed on the Amsterdam Stock Exchange. I purchased this ETF to increase the euro investments in my portfolio, because last 2 years I relatively bought a lot of stocks listed at the NASDAQ or NYSE. Also I consistently invest part of my money in ETF’s to add more diversity to my portfolio. The AEX index is partially consisting out of huge companies so I know that this ETF also has dollar exposure.

The top 4 stocks in the AEX index are Royal Dutch Shell (6,8% yield), Unilever (2,4% yield), ING Group (5,6% yield) and ASML (0,9% yield) and these 4 stocks have a weighting of over 50% together. I already have positions in these 4 stocks so with the purchase of this ETF my exposure increases.

Bank of America increasing their quarterly dividend with 60%

The board of directors of Bank of America announced that the quarterly dividend will be increased with 60% to $0,12 per share beginning in the 3rd quarter of 2017. This means the yearly dividend will be increased from $0,30 per share to $0,48 per share. With this dividend increase the yield of Bank of America shares is increasing from 1,24% to 1,98%.

The board also announced that autorization of a stock repurchase program of $12 billion. This is approximately 5% of the outstanding number of shares.

I have 33 shares of bank of america in my portfolio. The yearly expected dividend income will increase with $5,94 as a result of this dividend increase.

June 2017 Dividend Report

In June I received the following dividends:

USD dividends ~ $32,82 total:
Simon Property Group $7,00
Autoliv $3,60
Boeing $5,68
Johnson & Johnson $3,36
Monmouth $4,80
BorgWarner $1,96
McDonald’s $2,82
Wisdomtree Smallcap Dividend fund $3,60

EUR Dividends ~ €53,59 total:
Unilever €3,59
Aegon €15,60
Royal Dutch Shell €8,39
Think Morningstar High Dividend UCITS ETF €8,25
Think Global Real Estate UCITS ETF €8,63
Think AEX UCITS ETF €9,13

 

A total of €83,04