Boost Your Toyota Dividend Yield

Retirees seek reasonable, consistent yield without a threat to the nest egg. I am continuing my series on my favorite method for achieving this objective. While this is not investment advice for any specific reader, I hope that some will find it both interesting and useful.

Introduction

The program, simply described, consists of buying a good dividend stock and selling a call against the position. While there are many dividend programs and many covered call programs, there is a powerful synergy from putting them together. There is also skill in choosing suitable stocks and the right call to sell. Beyond the initial trade, there are many questions about how to handle the movement in the underlying stocks. I thank everyone who has joined in the comments. There are many good ideas for new themes and examples for future posts.

While I cannot explain everything in a single post, the entire series will provide a comprehensive look. Every trade is something we actually made for client accounts. Here is a review of the past articles, the stock cited, the issue illustrated, and a comment on where we stand.

1

IBM

Stock selection

Stock has declined and then rebounded. Will the calls expire worthless? If so, which new ones will we sell? Too soon to say.

2

T

Which call to sell

We sold the DEC 30 call which is now slightly OTM. With many good alternatives, we may let the stock be called away.

3

GIS

Position management

We are short the JAN 47.5 call, which is significantly out of the money after the recent market decline. We’ll collect the dividend in early January and reassess.

4

SJM

Losing a stock via assignment

The choice of call, based on our willingness to sell, worked well. The stock has declined again, making it a promising candidate for a new round.

5

RDS.A

Emphasizing diversity

It is important to choose stocks with diversity in mind. The portfolio had little in this sector, and we liked the upside. So far, we are down a couple of points on the stock, mostly because of an unfriendly market.

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