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Think of your stock portfolio as an Apartment Building that you own free and clear.

The building has 10 Apartments that are rented to:

Apple (NASDAQ:AAPL), Johnson & Johnson (NYSE:JNJ), Coca-Cola (NYSE:KO), McDonald's (NYSE:MCD), AT&T (NYSE:T), UnitedHealthcare (NYSE:UNH), Procter & Gamble (NYSE:PG), Exxon Mobil (NYSE:XOM), Amazon.com (NASDAQ:AMZN) and United Parcel Service (NYSE:UPS)

If you own the apartment building for the rent it generates and not to sell it, then the dividends and covered calls from your stock portfolio is the same as the rent from an apartment building.

The value of the apartment building isn't important if you have no plans to sell it and your goal is current income.

All the renters except for AMZN and AAPL have an excellent record of paying their dividends on time for decades regardless of their combined market value.

The Table illustrates what the dividends and January covered calls would generate in 9 months from the apartment portfolio if the executions took place April 19, 2013.

Note that the calls have added $27,930 to the rent.

The dividends from the renters should continue after January regardless of the total value of the apartment building, however, the Call premiums may differ for the following year and new renters might have to found to replace those who were exercised out.

This is a strategy for a retired income oriented investor who is willing to sell his upside potential for current income.

The purpose of the article is not to discuss the various rental programs that could be put in place for The Apartment Building with Covered Calls but rather to have you consider that your portfolio can be managed like one if your own it free and clear, have no interest in selling it and want current income from the rent.

Table: Rent from Dividends and Calls

STOCK

SHARES

SHARE

PRICE

COST

OF APTS

(1000s)

**DIVIDENDS

*STRIKE PRICE OF CALLS

CALL PREMIUM

RENT DIVS & CALLS

EXERCISED

VALUE 1000S

AAPL

100

400

40

1060

450

2120

45

JNJ

1000

84

84

2440

87.50

2060

87.5

KO

2000

84

84

2002

45

2120

90

MCD

1000

100

100

3080

110

1210

110

T

3000

38

114

5400

40

3120

120

UNH

1000

60

60

850

65

2450

65

PG

1000

81

81

2410

85

1800

85

XOM

1000

87

87

2280

90

3050

90

AMZN

400

260

104

0

280

8000

112

UPS

1000

83

83

2480

87.50

2000

87.5

TOTAL

837

16,501**

27,930

44,431

892

*All Calls Expire January 2014
**Dividends Adjusted for 9 Months

The yield is 7% from the dividends and call premiums if the shares are not exercised.

If the entire portfolio was exercised in January 2014 the yield would be 15.7%

The cost of the apartment building in the Table is $837,000; however, the annual percentage yields would be the same for buildings of half or double the cost.

Source: The Apartment Building Covered Call Strategy