Another REIT Purchase: WPC

Today I started in a new position in W P Carey Inc.

• WPC: 20 shares @ $63.48 --- Yield  6.00%

Total capital invested is $1,276.55 and will add $76.20 to my yearly dividends.

This is the second REIT I have purchased in two days. I bought HCP yesterday which apparently was a tad bit early. HCP after dropping quite a bit over the last month dropped again today with many interest rate sensitive stocks. Unlike yesterday, I was able to buy around the lows of the day.

Last year I invested about $1800 in ARCP and ultimately dumped the shares at the beginning of this year. Actually I really don't have much of a REIT exposure. I picked up shares of HCP and DLR in the summer/fall of 2013 and largely avoided adding REIT shares until yesterday. I decided to just stick my toe in the water with today's purchase as there appears to be sharks swimming in the water.

The good news is after taking an ass whipping in my energy holdings over the last several months, they have been rebounding recently and providing a nice lift to my portfolio. ESV actually touched $27 today and I almost had a heart attack!

So what do I go and do?? Jump into the REIT sector. It was very scary during the back half of 2013 and appears to be volatile once again. PERFECT!!!

I guess at the end of the day I can only invest in so many "bread and butter" stocks.

Let the fun begin!

DEFY MEDIOCRITY

XOM raises dividend 5.80%---New yield is 3.32%

Today it was Exxon's turn to come up to the plate and they delivered.

Exxon Mobil declared a quarterly dividend of $0.73 per share. This is a 5.80% increase from the prior dividend of $0.69 and the new yield is 3.32%

The ex-dividend date is May 11th and the pay date is June 10th.

Currently I own 62.09 shares of XOM so my yearly dividends will increase by $9.93.

How much pressure is Chevron feeling right now??


Also from the propane front, APU delivered some very welcomed news.

APU raises distribution 4.54%---New yield is 7.41%

I missed the announcement on Monday that APU is increasing its quarterly distribution from $.88 to $.92. This is a 4.54% increase and the new yield is 7.41%

The ex-dividend date is May 7th and the pay date is May 28th.

Since I own 76,99 shares my yearly dividends will increase by $12.32.

Stock Purchase: HCP --- $16,000 Forward Passive Income

Today I added more shares of HCP.

• HCP:  120 shares @ $41.73 --- Yield 5.42%

Total capital invested is 5014.55 and will increase my dividends by $271.20. I have not added to my position since late 2013 so I feel it is ok to increase my REIT holdings.  Today's purchase increases my total share count to 330 shares and will pay me roughly $745 a year in dividends. HCP  also represents about 3.33% of my total portfolio.

As a side note, I just passed $16,000 in forward passive income assuming no further dividend cuts. Right now I believe my holdings are secure. This is another conservative purchase and I will continue to make mostly safe and boring purchases for the duration of the year.

My current intentions are to reach $17,500 in forward passive income by year end.

DEFY MEDIOCRITY

IBM raises dividend 18.18% --- New Yield is 3.03% & Weekly Purchases

Here are my automatic investments for this week.

• SO:  4.50 shares @ $44.44 --- Yield  4.88%
• PG:  2.48 shares @ $80.72 --- Yield  3.28%
• WMT:  2.52 shares @ $79.36 --- Yield  2.47%

Total capital invested is $600 ($200 in each company). The combined yield on the purchases is 3.54% and will add $21.26 to my yearly dividends.

Even though PG and WMT did not raise their dividends by very much, they are both still very high quality businesses and should provide reliable and increasing dividends for many years to come. The fact that WMT has dramatically underperformed TGT in the last year also is a factor with my purchase. PG has been left behind by everything for the last couple of years. Typically companies like these don't accept losing ground to their rivals lightly. We shall see.

Companies on my radar for next week include to ones listed above as well as NOV, JNJ, CAT, AXP, PM, XOM, PFE, and KO.

Then again, I may not buy anything.


IBM Dividend

In other news IBM announced that it will be raising its quarterly dividend from $1.10 to $1.30. This is simply amazing!!! This is an 18.18% increase from last year and the new yield is 3.03%.

The ex-dividend date is May 6th and the pay date is Jun 10th.

Currently I own 37.33 shares so my yearly dividends will increase by $29.86. This increase alone increases my yearly dividends by $8 more than this week's purchases. Very nice!!!


DEFY MEDIOCRITY

Options trade: GM

Today I sold the following covered call in General Motors

• 1 Sell GM Jan 15 2016 $40 Call (Open) --- $.98 --- Net proceeds --- $90.30

Unlike my first experiment with GE (deep in the money call) I took a much more conservative approach this time. Currently GM is trading around $35.75 as I type so a lot of price appreciation would have to occur to lose these shares. Quite honestly it wouldn't bother me to lose them at $40.

At first glance the premium of $90.30 doesn't seem overly impressive by itself.  However, when you consider 100 shares of GM currently pays $144.00 (yearly) after its recent dividend raise the combination of the two is actually very nice.

Going forward these are the types of option trades that I plan on making. Lower risk plays that will give my yearly income a boost.

DEFY MEDIOCRITY

First Options Experience with GE

I can honestly say that I have never been interested in trading options. For one thing I never really understood them and secondly it seems more like a gamble than an investment strategy.

There are numerous bloggers that not only invest in dividend paying companies, but sprinkle in a few options here and there as well.

What seems to be most prevalent is to sell calls on stocks that are currently owned or sell puts on companies that would like to be acquired.

One of the owners of the company I work for has many different options in companies like AAPL, BIDU, and GOOG. He has been encouraging me to jump into options but I really didn't feel comfortable since my main investment strategy is to accumulate stocks that will provide an income for my future life. To me, these two strategies always appeared to be in conflict with each other.

I eventually asked him to look up some of the premiums on companies like T, KO, RDS-B, and a few others. After watching more than a few transactions over the year from different bloggers, I decided to start off in the shallow end of the pool using a cover call strategy.

Two weeks ago when GE spiked after the news of  Jeff Inmelt's plan to reduce GE Capital I decided to sell a covered call. The price was trading in the $27-$28 range at the time. The usual transaction people would make is to find a date sometime in the future and a price that is high than the current trading price. A premium amount would be set based on the time and price requested. Since GE was at the high end of its multi year range, I felt like it might drift back down.

I should have set a strike price in the $30s in Jan 2016, but I did not do this. Instead I did something totally stupid and sold an in the money call which has been bothering me ever since.

Here are the transactions that took place.

• 4/10/2015 --- SELL GE SEP 18 2015 CALL (OPEN) ---2 @ $5.89 --- Proceeds --- $1169.55

So essentially I was paid a premium of $1,169.55 to sell 200 of my GE shares for $22. Immediately after I opened this trade Sharebuilder showed the Option at the bottom of my screen with ITM.



I have been watching this option every day for the last two weeks and every day it said I had a loss of $1300.

Between the ITM (in the money) icon and the fact that my option value never changed values, I thought that I screwed something up and had my shares called away. Shares of GE actually traded above $28.50 so this just reinforced my original thoughts that I had lost my 200 shares @ $22.00 and received the $5.89 premium less commissions.

I actually felt pretty stupid and kept waiting for my shares to disappear. Each day for the next couple of days I would check my Sharebuilder account expecting to see my shares disappear. They didn't so I would then check the option value and it continued to remain unchanged at $1300.

This actually created some confusion because GEs shares had started falling and were in the $26 range. I kept thinking if I haven't lost my shares when it was trading above $28.50, why am I still showing a $1300 unrealized loss when GE's price keeps dropping.

Finally I decided to click the button that says Close just to see what would happen. Again I wasn't certain whether I still owned my shares or not. I did this on Tuesday when the shares were trading around $26.50.

What popped up next was an estimated amount needed to close the account. It said I didn't have enough cash to make the transaction. Yes I used the premium to buy other stocks. I should have not done this. Apparently I can't transfer funds from my bank to close options like I can when I make weekly investments. The good news is that it said I needed $990 to complete the transaction. At least I knew that I still owned the shares.

I guess it's good that I tried to close the option because now I know to keep some funds available if I ever need to close out future options. I set up a transfer so I could try again. Anyway today just before close the thought of always being in the money bothered me too much so I closed out the position just to get it off of my mind.

• 4/24/2015 --- BUY GE SEP 18 2015 CALL (CLOSE) --- 2 @ $4.90 --- Cost --- $988.45

As I listed above, I had to pay $988.45 after commission to close the account and I originally received $1169.55 so I pocketed $181.10 for my 14 day experiment.

To put this in perspective I will be receiving around $99 in dividends on Monday from my 400+ shares of GE. This 2 week experiment netted me almost twice that amount on just 2 options or 200 shares.

Going forward I am going to continue developing a strategy that includes options along with my regular investments. While I haven't posted about it, I actually have Jan 2015 calls on BP@ $48 and VZ at $50.

I guess the summary of my experiment is be careful because you can EASILY lose shares you own and EASILY buy shares of a company you might not want to own. The one thing I am happy about is that I am keeping all of my GE shares. Seeing that option premium in relation to the dividends I will receive is pretty powerful to say the least.

Anyway that is my first experience with options and it was a learning experience for sure. While Shareholder is great in my opinion for buying stocks, I don't think it is the best option (no pun intended) for trading options.

DEFY MEDIOCRITY

JNJ raises dividend 7.14% --- New yield is 2.99%

Well more good news came today via JNJ's dividend increase. Today JNJ announced they will be increasing their quarterly dividend from $.70 a share to $.75 a shares. This is a 7.14% increase and will bring the new yield up to 2.99%

The record date is May 26th and the pay date is June 9th.

This news is outstanding and with a 3% yield I am certainly going to continue adding more shares in the near future. I currently own 70.94 shares so my yearly dividends will increase by $14.19.

Hopefully IBM, XOM, and CVX deliver good news in the next week. All three of these companies have been battling their own issues throughout the last year, but typically deliver strong increases. I am expecting a double digit increase from IBM and low single digits from CVX and XOM.

Hopefully I am right.