jokingme

Dividend Income in Market Downturns

This article made me look to see how I've managed the 'income' side of my portfolio this year. Even though my portfolio is down significantly for the year, my dividend income is up over 20% (not including option income).

Major reasons:
1. My 8 largest holdings (nearly 50% of portfolio) increased their dividend by an average of more than 10%. All increased their dividend. I may not get 10% again, but I expect increases from all of them in 2009.
2. Shift from low/no dividend stocks to preferred shares (mostly REITs). In total these are equal to my largest single position and yield over 11%.
3. Use of covered calls to supplement dividends. Using this income to purchase more dividend paying/growing stocks and selling more CCs. Done with small position sizes only (.5 - 1%). Not for the faint of heart.
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As for O, in 2008 I bought O and sold for a profit, bought O-PD and sold for a profit, repurchased O and have Dec$25 covered calls sold against it. Made as much on O covered calls as I did on the O dividends in 2008. Looking forward to selling another juicy CC on 12/22. No, I won't be upset at all if O is called away for $25 as I'd likely just switch back to the preferreds again.
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