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Marty Chilberg
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I'm a retired CPA who spent the majority of his working career in technology companies. My work included management stints at Atari Inc, Daisy Systems Corp, Symantec Corp and Visio Corp. My last position at Visio (VSIO) was as CFO and VP Finance and Operations.
  • Digital Realty: Going "Ex" Next Week 0 comments
    Jun 5, 2014 8:12 PM | about stocks: DLR

    Digital Realty (NYSE:DLR) is a data center REIT investment. I bought in two stages last summer and have held it since. The stock isn't particularly expensive with a C15 PE of around 11.5x and a yield just shy of 6%. They have been a slow steady grower around 7.5%. My total return with DRL has been 28% over the past year. That has come from equity appreciation of around 16% and the rest in dividends and covered call income.

    My strategy with DLR has been to try to sell calls as the stock is running up to the ex-dividend date. While not always the case, a lot of high yielding stocks run up just prior to the ex-date from dividend investors trying to capture the yield. What seems surprising is that many times, this run will be more than the actual dividend and the resulting sell-off after the ex-dividend date is also more than the actual payment. That provides an opportunity. Sell a covered call a few days before the stock goes ex and look to either buy it back for a profit or, if the stock looks weak, hold it go to expiration. My normal objective is to try to get a premium at or above the amount of the dividend.

    I sold a July $60 call on DLR today at $0.75. Couldn't get the premium up to the dividend amount of $0.85 but with the jobs report out tomorrow it gives me a little insurance on the stock as well. This strategy has worked 4 out of 5 times for DLR. One time I ended up buying the call back at a loss when the stock rallied. If it does this time, I'll likely let the stock go. I still like DLR but over $60 and with an interim CEO, I'm not inclined to chase.

    Disclosure: I am long DLR.

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