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My name is Ron Smith, I am 62 years old and just retired from a community college. I conceptualize our IRA portfolios as Growth and Income funds - about 90% dividend stocks, 10% options (LEAPS mostly) and 0% cash at this time (March, 2013. I checked professor on the description list, but I am... More
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  • Capital Gains And Apple Call Options

    I said in my last article I would write about this:

    My dividend growth history is relatively recent, going back a couple of years. Before that what I did is described below by someone who I have known on Apple forums for some years:

    It is Ron who is the legendary former AAPL options gunslinger and now sage dividend investor.

    I thought it was an overly generous description of my past and my present, but I did get out of the Apple options game in mid to late 2013 while preserving most of the gains I had made over the previous 4 years. It was those gains that funded our dividend growth portfolios - and later some rollovers from other retirement accounts.

    In the meantime Apple has been a position in my dividend growth portfolio. I had a hankering to go back into options back in September, 2013 when Apple dropped from $72 and change to $63.30, but I had already turned in my retirement papers and was averse to taking any risks with investments.

    Recently, however, I decided to come out of retirement and put a portion of our portfolios in the Apple call options and LEAPs. There are several reasons for this:

    1) We have been living in Merida, Yucatan, Mexico for 7 months now and have a pretty handle on our expense. Our pensions and SS checks do a more than adequate job of covering those expenses.

    2) I could maintain our core dividend growth positions, continuing to reinvest the dividends, while freeing up some money for a capital gains strategy using Apple call options.

    3) I frankly missed having some skin in "the game."

    I did sell or trim some DGI positions to make money available for this pursuit, among them AAPL, KMB, CAT, MCD, WAG and NGG. I made up for some of the lost income by adding to KMI, but the income is still good and more than adequate.

    July 21 I started opening some Apple call positions. I will not go into the details here, but will be glad to upon request. I added to some of those positions on August 8, on a dip in AAPL. These positions, when they were opened, were about 13.5% of our total portfolios

    So far those positions are up a bit over 30%. The plan is working and being much more closely monitored than our dividend growth stocks. In dividend-ish terms, we have made about 140% of the amount of dividends generated by the dividend growth part of our portfolio.

    It is my opinion that Apple has a pretty good year and a half (or more) in front of it. We'll see. Lessons I learned in 2008 (when I went catatonic and lost a bunch of money) served me well in mid to late 2012 when I did a pretty good job of preserving capital and moving into our current dividend growth portfolio.

    That's it in a nutshell. Will be happy to answer questions about the past, present, or future. Just let me get out my deck of cards :).

    Tags: AAPL, Options
    Aug 25 2:10 PM | Link | Comment!
  • Retirement, Dividend Growth Investing, Capital Gains And Apple Options

    The blog title will do just fine for laying out the content of the post.

    I retired in late 2013 at the age of 62. My wife retired in the same year, at the age of 59. We are both receiving pensions (one for me, two for Kathy). I took Social Security at the age of 62 and Kathy is receiving SS Disability payments because she is legally blind from retinitis pigmentosa. She hung on as long as she could, but it is tough being a graphic designer when one has lost most of their vision. The president of her college did like to occasionally introduce her as their blind publication designer, though.

    Our pensions and SS covers our cost of living here in Mexico's Yucatán peninsula (plus a little), which seems to be about the same as it would be in low and moderate cost areas of the United States. We bring in an amount a bit higher than the median family income in the USA from these income sources.

    On to dividend growth investing. I have been an investor since the mid-1990's. In 2011 I started making a shift to dividend investing. In late 2011 I sold all my dividend positions and returned to another path for a bit more than a year. More on that later. I recently wrote a blog post about dividend growth investing, that I started doing in 2012, here:

    kathron.net/2014/07/09/investing-during-.../

    There is nothing spectacular about that blog post, and some of the language could have easily come from chowder or Crosetti, or Van Knapp, or Nadel, or Wells or any of a number of other people whose writings and recommendations I have benefited from. It is all pretty basic stuff and I will not repeat it here, but if you are interested, go to the link. For more detailed information, do a search on any of those named SA authors and blog writers.

    That is going to be it for now. I will get around to Capital Gains and Apple options within the next week.

    Jul 26 11:36 PM | Link | Comment!
  • Portfolio Yield Points

    For this week's exercise I decided to look at the yield points of the stocks in my portfolio. This is based on current yield Friday's close (or close to the closing price - I do not remember when I downloaded it) and on the forward year yield. Yield was carried out to two digits after the decimal point, and several were within a couple of hundreths of the next category.

    Overall current yield of portfolio (total annual dividends / value of holdings) is 3.76.

    Less than 2% - AAPL WAG

    2% - 3% - BAX, CAT, CSCO, JNJ, KMB, KO

    3% - 4% - AVA, BMO, BNS, CLX, CVX, D, GE, GIS, KRFT, LMT, LNT, MAT, MCD, PAYX, PG, POT, SE, TGT, UL and WEC

    4% - 5% BCE, KMI, O, NGG, RCI, SO

    More than 5% - APU, ARCP, DLR, OHI, SDRL

    Jul 13 8:50 AM | Link | Comment!
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