This is my November 2018 FFJ Portfolio dividend income update. The portfolio was created in January 2017 for the purpose of demonstrating how investing in well managed companies with competitive advantages can assist investors in reaching their long-term financial goals without the need to speculate or to chase dividend yield.
Another month has come to a close and time for my monthly FFJ Portfolio status update.
The record of the monthly dividend income generated through the Core and Side accounts within the FFJ Portfolio can be accessed here.
The holdings in the Core and Side accounts can be accessed here.
November is one of the 4 months of the year in which I receive the lowest level of dividend income; February, May, and August are the other months of the year in which dividend income is on the low side.
During the month I only acquired 150 Goldman Sachs (GS) shares for the FFJ Portfolio ‘Side Accounts’. In addition to this trade, I executed the following option trades:
- November 15th - I wrote covered calls on The J.M. Smucker Company (SJM) with a $125 strike price and a December 21st expiry which generated $1.15/share.
- November 23rd - I wrote covered calls on Chevron Corporation (CVX) with a $120 strike price and a December 21st expiry which generated $0.93/share.
- November 28th - after SJM released Q2 results that were not well received by Mr. Market I bought back the $125 December 21 2018 options at a cost of $0.05/share for a net gain of $1.10/share. I then wrote new options with a $110 strike price and a January 18, 2019 expiry for $0.90/share.
All figures reflected above are before relatively insignificant option fees.
I also wrote other covered calls but the underlying shares are not held in the FFJ Portfolio so I will dispense with any further discussion on these transactions. A bit more detail on these option transactions, however, can be found here and here.
The CDN holdings within the Core portion of the FFJ Portfolio generated CDN ~$555 and USD ~$1,064 bringing YTD dividend income to just shy of $13,059 and just over USD $14,311. The projected dividend income for December will push me over my CDN ~$14,000 and USD ~$17,500 annual dividend targets.
The ‘Side Accounts’ generated CDN ~$812 and USD ~$0 bringing YTD dividend income to CDN ~$5,885 and USD ~$2,100. I am confident the dividends generated from the holdings within the ‘Side Accounts’ will enable me to reach my CDN ~$7,000 and USD ~$4,000 annual target.
As I have indicated in previous articles, if it appears the underlying shares will close above the strike price my plan is to close out my position(s) and to write new covered calls at a higher strike with a January or February expiry.
2018 was somewhat of a transition year in that I only set up the ‘Side Accounts’ in March. It took some time to deploy funds into a high quality companies so there were several months in which no dividend income was received.
Over the Christmas holidays I plan to set aside some time to forecast dividend income for 2019. At the moment, however, I have completed a very quick back of the envelope calculation to arrive at the following 2019 targets:
- Core Accounts - CDN $15,000 and USD $17,000
- Side Accounts - CDN $12,000 and USD $10,000
I am not including any option income in my 2019 projections as I view this source of income as purely opportunistic.
That’s my roundup for November. Here’s hoping you made progress on your journey to financial freedom!
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