DGI Adventure 04-03-2017 Month in Review – March 2017

The end of March marks the end of the first quarter. I’m not sure what that means, but it seems important.

Let’s take a look at what happened.

Portfolio Summary

Stock Purchases

6 stocks purchased. Technically I guess you would have to say that all six are “new” positions, but several are stocks that we’ve owned previously; projected annual income increased by $840.56 based on current dividends.

03/02/17 – VLO: 25 shares purchased @ $67.00/share for a total investment of $1,681.95 including $6.95 commission. I previously owned VLO shares in both the inherited IRA and the taxable account. The taxable shares were sold as part of the great catfishwizard taxable liquidation in January. I lost the IRA shares to a covered call that was assigned early for the last ex-div date. I failed to mention that early assignment because that was right when we were moving. One of the glossed over trades during that period was a sold VLO put on 2/10/17. That’s what I did instead of rolling the covered call that I knew I was going to lose. Anyway, I still like me some VLO, so I bought shares in my ROTH.

Annual projected income is increased by $70.00/year based on the projected annual dividend of $2.80/share.

3/6/17 – CSCO: 44 shares purchased @ $34.00/share for a total investment of $1,502.95 including $6.95 commission. I’ve been fairly active with selling puts against CSCO shares, but haven’t been assigned yet. It occurred to me that back when I ran my original investment thesis, I projected “fair value” at $34.67 assuming a 7% dividend growth rate. Then management announced an 11.5% increase in the upcoming quarterly distribution, and I decided to get some shares for the ROTH.

Annual projected income is increased by $51.04/year based on the projected annual dividend of $1.16/share.

3/15/17 – SBUX: 28 shares purchased @ $54.12/share for a total investment of $1,522.31 including a $6.95 commission. This was one of Mrs. Wizard’s pickups. She is very, very good at randomly picking a price point for her limit orders and having that price point end up being a short term low for the share price. Maybe it’s not really random. Whatever her system, she’s pretty good at it.

Annual projected income is increased by $28.00/year based on the projected annual dividend of $1.00/share.

3/17/17 – TGT: 100 shares purchased @ $56.50/share for a total investment of $5,650.00. No commissions were charged since this was the result of a put option that was assigned. The contract that was sold was another one of those glossed over trades in February. I immediately started selling covered calls against this new position. I’m not sure I trust TGT as far as I can throw it right now.

Annual projected income is increased by $240/year based on the projected annual dividend of $2.40/share.

3/17/17 – SPY: 100 shares purchased @ $238.50/share for a total investment of $23,850.00. No commissions were charged since this was the result of a put option that was assigned. I got a wild hair and decided I had to get this quarter’s SPY dividend. I didn’t actually get it, but I got the equivalent (and then some) by selling an extremely short-dated at-the-money put the day before ex-div. Of course then the market corrected. So it goes. I’m selling covered calls.

Annual projected income is increased by ~$400/year based on who knows what. I have no idea how dividends are calculated for SPY, but they seem to be ~$1.00/share/quarter.

3/21/17 – GPS: 56 shares purchased @ $22.93/share for a total investment of $1,291.03 including $6.95 commission. I used to own GPS in my taxable account before the great catfishwizard taxable liquidation. I’ve almost lost count of how many times I’ve sold puts against GPS shares, but haven’t been assigned. With the execution of the other ROTH purchases described above, I decided to put in a limit order that would use up the remaining funds (or close to it) buying GPS if it dropped to the right level.

Annual projected income is increased by $51.52 based on the current annual dividend of $0.92/share.

I also purchased more UVXY puts. The new positions, which are still open, are:

2 contracts of the UVXY 18JAN19 15.00 P (bought 3/24/17 for $9.40793/share)

I have no way of projecting what kind of income these trades will generate, but I am pretty confident they will be positive. The positions I liquidated this month, netted a ~21% and ~46% annualized return.

All UVXY put trades are documented in the “UVXY” tab of the Dividend Income Tracker.

For the uninitiated, I am shorting UVXY because it is the worst ETF ever. I use long put positions so I can avoid the use of margin and do these trades in tax-advantaged accounts.

Additional exploits can be found here, here and here.

Pay Days and Raises

Dividend Income Tracker is published back at the mothership and has been updated.

Total investment income of $1,123.47 with a taxable total of $30.01. We’ll call it 15 “pay days” with 38 individual payments received.

Options premiums represent $557.64 of that total.

Capital gains represent $151.30 of that total.

Which leaves $384.52 of actual bona fide dividends (and $30.01 of P2P lending interest).

I feel like that’s a pretty balanced split for once…

Lending club income is aggregated into a single income record for simplicity’s sake. It actually arrives as a lot of small payments over the course of the month. In December I experienced my first “charged off” loan, and last month I officially had to write off one more. Now there are two loans that are late (between 31 and 120 days), and two that are in the grace period. That’s an improvement:

This should be fun to track. This table will grow with each monthly update.

Lending club’s algorithm has suggested I write down $62.80 worth of principal for the loans that are late or in the grace period, but as the eternal optimist, I’m going to continue to wait until the loans are actually charged off to recognize the loss.

Last month the algorithm only suggested I write off $56.20, which is interesting, because I have the same number of loans in the “extremely late” category, but obviously two of the loans that had drifted into the grace period were brought current. So “extremely late” loans getting later is more of a problem than can be offset by a couple grace periods getting cleared up. Huh…

Comparisons

Month over month, investment income was down from $1,402.42 or -19.89%.

Year over year on the other hand represents a nice bump. In March of 2016 I earned $451.97 in passive income. This month represents a 149% increase over that total.

Raises

One of the dividend distributions received represented a raise:

GILD paid $0.52/share compared to $0.47/share in the previous quarter. That represents a 10.64% increase. Mr. Market hates GILD right now because it’s not doing anything with it’s giant horde of cash except sitting on it and returning it to shareholders in the form of dividends and buybacks. They must have a lot of confidence in their pipeline. I’m so underwater on my cost basis, that I’m going to have to hang on for a while to find out.

Well the market corrected a little bit to end the quarter, but it’s still pretty lofty. Here’s looking forward to an interesting April.

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