2021 is over and it’s time to look at the December 2021 dividends.
December pretty much follows the September and June cycle of dividends which were the worse performing months in the past. So it’s no big surprise that the December performance is a bit lacking.
Month over month comparisons seem a bit unfair because it’s not like the companies that gave dividends this month were the ones that gave dividends last month. I have settled for a quarter over quarter performance or rather trying to line up the same cycles. I am a bit excited since in a few months I will be able to do month over month comparisons which should take away some of the confusion.
From a dividend performance standpoint, I got dividends from 18 different companies for a total of $39.18 during the month of December. There were dividend increases from two companies and one company restarted dividends after pausing it for a while.
Exxon increased its dividend by a penny going from $0.87 in September to $0.88 in December.
Simon Property increased its dividend by 10% going from $1.50 to $1.65.
Ford restarted their dividend program and gave $0.10 per share in the month of December. Ford had stopped their dividend program in early 2020.
Hey, look at that. I am doing the monthly dividend income report at a more reasonable time compared to the previous months. Hoping this is a new beginning where I am much better at doing these. I wouldn’t bet on it just yet, not until I can string a few months together.
Let’s take a look at how November was, a total of $54.84 in dividends from 10 different companies.
No dividend decreases from the last time around. I am comparing it against the August 2021 dividends since that is how the quarterly cycles work out. Definitely good news.
To make this better there were 3 dividend increases.
Verizon dividend increased by a tiny smidge over 2%. Dividend per share went from $0.627 to $0.64 per share.
Texas Instruments by a whopping 12.7%. It was $1.02 in August and November was $1.15.
And finally, Sirius XM dividend increased from $0.015 to $0.022 for an increase of 47%.
I am getting to this pretty early in the month compared to my usual timeframe. I think I posted the September income report like a week ago. It’s one of the better months of dividend income and definitely a big upgrade to the September numbers. A total of $66.42 in dividends from 11 different companies.
There was only one dividend increase, Altria raised its dividend by 4.65% from $0.86 to $0.90 per share.
It’s early November and I am just getting to the September income report now. I have continued with being late to these.
September was closer to one of the worse months with a total of $37.76 in dividends from 16 different companies. Only June was worse than September. There is a good reason for this since most of the companies that paid out dividends in June paid in September as well.
Dividend increases by 6 companies.
Wells Fargo raised its dividend by 100% from $0.10 to $0.20 per share.
Discover raised its dividend by 13.6% from $0.44 to $0.50 per share.
Target dividend increased by 32.3% making it $0.90 per share; it was $0.68 per share last time around.
A bit over a 2% increase in Walgreens dividend, $0.4675 to $0.4775.
Royal Dutch Shell increased its dividend 37% from $0.35 to $0.48.
Simon property by 7.1% from $1.40 to $1.50 per share.
Another month has passed and it’s time again to update the monthly dividend income reports. I am making a habit of doing the dividend reports pretty late. I should probably have that as my new year’s resolution.
August was a worse month than July. A total of $54.83 in dividends from 11 different companies.
No Dividend increases or decreases this month. Just the usual fluctuations in the SPHD dividend
Another month has passed and it’s time again to update the monthly dividend income reports. July was a better month than June with almost double the amount in Dividends. A total of $64.97 in dividends from 12 different companies.
Dividend increases from 3 companies.
Cardinal health raised its dividend by 1% from $0.486 to $0.491 per share.
Medtronic by 5.8% from $0.58 to $0.63 per share.
Simon property by 7.7% from $1.30 to $1.40 per share. Added bonus with Simon Property is it looks like there will be another dividend increase to $1.50 for the next payout which is scheduled on 09/30/2021.
General electric is not part of the portfolio anymore after the 1 for 8 reverse split that went into effect on August 2nd. I think my brokerage (Robinhood) automatically sold it since I only had 5 shares and it wasn’t enough to form one share after the reverse split.
It’s almost August and I didn’t do my June dividend income report. Pretty late to the party. June looks like a slower month with $34.80 in dividends from 16 different companies, the lowest haul after I started tracking dividends here.
Most of these shares were bought more than a year ago. Some of them are closer to 5 years. That was when I was too scared to commit a lot of money to buy shares in one company. So I would usually do onesie-twosie shares and that is pretty clear here with dividends less than a buck from half of the companies in the list below.
All of us are used to dividend stocks being paid out on a quarterly basis. You need to get creative to have a portfolio with income every month. This led me to look into dividend stocks that pay dividends every month.
The question here is what if monthly dividends are not enough. What are the choices available if you are looking for something that pays a dividend every month?
SoFi has done exactly that by creating two ETFs that pay a dividend every week.
What is SoFi?
SoFi is a relatively new fintech company that specializes in all things money. Their number one priority is to help you get your money right. So you can secure your financial future and live life on your terms. It doesn’t matter what kind of money trouble you have or what kind of money tool you are looking for. They have a solution for you.
Are you looking to consolidate credit card debt? They offer personal loans.
Are you in the market for a new home? They offer mortgages.
Are you looking to get your finances in order? They have SoFi Relay for budgeting.
They have a product for all of your money needs. If they don’t have a tool directly, then they have a partnership that will get the job done.
I first heard about SoFi a few years ago when a friend mentioned about refinancing and consolidating all of their student loan debt. Student loan refinancing was their first product and from there they introduced more products as time went by. They launched Mortgages in 2014 and SoFi invest in 2019.
While sofi has made products like an investing app, they have also dabbled in making some ETFs. They offer 6 ETFs as of now but I am going to look into 2 of them that have dividends paid out every week.
I can’t think of a better ticker name than TGIF that would suit this ETFs purpose. I couldn’t find any information whether it is named for Thank God it’s Friday but I think it’s safe to assume that’s the case. As the name suggests Dividends are paid out every week on Friday.
This fund invests in investment grade and high yield fixed income securities. That’s a difficult way of saying it invests in corporate debt and junk bonds. It is an actively managed fund with exposure to over 100 different bonds for diversification. Biggest holding as of March 31st 2021 is a Ford corporate debt that expires in April 2023.
Annual Dividend: $2.60
Dividend Yield: 2.46%
Paid out: Weekly
This is a relatively new offering so there isn’t a long history for dividends. The first date of dividend payment is 10/07/2020.
Every Mutual fund and ETF charges a fee to its shareholders to cover operating expenses. TGIF is no different. Since it is an actively managed fund, the fees are a bit higher than usual. TGIF’s expense ratio is 0.59%. That’s $5.90 for every $1000 invested in the fund over a span of the year.
This is the second one on the list. I like how they have named these ETFs in the most straightforward way possible. This one is even newer than the TGIF ETF. First day of trading was 5/11/2021.
The goal with this is the same in terms of paying out dividends every week but the investments are different. This fund is made up of the most consistent dividend paying companies throughout the world. I couldn’t find a list of the companies they have in their holdings. However they have some stringent criteria for the companies that’s in the fund. Market capitalization of $1 Billion, dividend payout ratio not exceeding 100%, Company has paid dividend the last year and is projected to pay dividend the coming 12 months.
Annual Dividend Payout: $1.04
Dividend Yield: 2.07%
Paid out: Weekly
Expense ratio for WKLY is 0.49%. It is a bit cheaper than TGIF but this is still expensive. The 0.49% expense ratio amounts to $4.90 for every $1000 invested in the fund for a year.
Effective Dividend Yield
The dividend yield you will find by a quick search of TGIF and WKLY shouldn’t be considered as the dividend yield you can expect. You will not see any difference in the payout into your brokerage account but the expense ratio has to be accounted for somewhere since that is a cost to you.
The way I would look at the effective dividend yield for funds like these is the Dividend yield – Expense ratio.
Should you buy it?
On a high level, there is a quick and easy method you can use to decide this. If you don’t have a lot of money to be well diversified and want to have weekly income, then TGIF and WKLY make a lot of sense for you.
This is a scenario where you are not looking at the dividend yield or the stock movement. A set it and forget mentality that will bring in income.
Now to the nitty gritty- this is the I care less about getting dividends every week.
WKLY is a diversified fund invested in dividend stocks. The 2% dividend yield is more than the S&P 500 dividend yield which is currently at 1.37%. so it’s definitely not slacking in that area. However, since this fund is invested in dividend stocks. You could look at the fund holdings and pick out individual stocks you want to own. Some of them will have a dividend yield higher than 2%. You can have the ones you want and ignore the ones you think are not good. You will be sacrificing some diversification in the process.
TGIF is a fund invested in corporate debt and high yield junk bonds. The 2.5% dividend yield is good and similar to WKLY is higher than the S&P 500 dividend yield. Again if you are not desperately looking for weekly income, you can pass on this and go for a dividend stock that pays better. Only reason I can think of adding TGIF is for the added diversification. I have no exposure to bonds and TGIF can help with that.
It’s the beginning of June so it’s time to take a look at May Dividends. This is my second go around with a monthly dividend income report. Since I just started tracking this my only comparison is the April 2021 dividend income. May is about $20 lower than last month.
A Total of $54.56 in dividends in May from 9 different companies and 1 ETF.
The short answer is NO. Puts are not riskier than calls. This is also true for the opposite. Calls are not riskier than puts either. The long answer is, it’s way more complicated than picking a yes or no. It depends on a few factors and that is usually the case with options a lot of times.
Options are almost always fairly priced. The price you see at the moment is the fair value for it. If you see an option not fairly priced, there is no way you can take advantage of it as a retail trader. Algorithmic trading by big institutions will make that disappear before you can even decide how to take advantage of it.
Why do people ask this?
If you are looking at the options prices in an index, you will notice that the puts cost more than the calls. For example, I am looking at a SPY option with a strike that is $10 out of the money and compare it against a call that is $10 out of the money. SPY is around $415 so I am going to look at the $405 put and the $425 call.
$405 put cost $792 while the $425 call cost $480. That is a difference of $312. I am looking at SPY options that expire in the July cycle which is 54 days away.
Both of them are about $10 away from the stock price. The chances of stock moving up or down $10 should be somewhat the same. If the probability of the stock reaching $405 or $425 is the same, then the risk is the same….. but if the risk is the same then why does the put cost $312 more than the call?
Why are puts more expensive than calls?
The basic supply and demand model is in action when it comes to options pricing. Most portfolios are usually buy and hold portfolios. So the “cheapest” way to protect a portfolio from an unforeseeable market crash is to buy a put. So looking at the SPY example from above, you can say more people are buying the $405 puts compared to the $425 calls so they can get better sleep at night, then that naturally pushes up the prices of puts making them more expensive than calls.
The old adage of the market takes the stairs up and the elevator down plays a role in this. Nobody really knows when the market is going to crash but when it does, it usually happens very quickly.
Whenever I look at my brokerage account, I am hoping for a sea of green with all the stocks I own going up. I don’t look at how much it has gone by. As long as it’s moving up, I am making money and my portfolio is doing better. It’s usually a tiny percentage and it’s grinding up slowly. But when there is a red day, I am looking at how much it’s down by and the panic sets in after depending on how bad of a day it is.
I have a small portfolio and I panic even though I am fairly confident that the stocks I own will eventually come back up. Now let’s imagine a professional money manager who has to answer to investors. Does paying up for puts seem all that bad if your job is potentially on the line?
Are puts always more expensive than calls?
I picked SPY and mentioned Index earlier on purpose. I looked at options 60 days out and almost 1000 days out and I couldn’t find an option cycle when calls are more expensive. I can’t think of a time I remember seeing calls being more expensive in the Index. So while Puts are usually more expensive in every underlying, that is not always the case. I can think of 2 scenarios where the calls are more expensive than puts.
1. Melt up in a stock
This is usually for whatever stock or industry is the talk of the town at the moment. This happened with Tesla in 2019. GameStop in Feb 2021. Almost all SPACs at the end of 2020 and beginning of 2021. Tilray in 2018 pretty much after they went public.
A melt up is when there is a sudden big up move in a stock and it keeps doing that for a few days where that’s the only stock people talk about. That’s when everyone is running to buy far out of the money calls like the $800 strikes in GME because any strike remotely close to the stock price is way too expensive for anyone to afford. The allure of great riches you see on Reddit and full-blown FOMO gives you the impression that you can still mint money with those far out of the money calls.
These are risky as hell because the big move has already happened and you are looking at very expensive calls when people are trying to lock in their profits and get out of the stock. You are going to be left holding the bag in that scenario.
I don’t have any great examples like the GME one right now. I don’t have a stock that is exactly melting up either. However, I have Roblox that has gone up by almost 20% in 3 days and the calls are more expensive.
Roblox (RBLX) closed at $82.50 on Friday and I am looking at the $75 strike put that is $7.5 out of the money to the downside and the $90 call that is $7.5 out of the money to the upside. The $90 call cost $585 and the $75 put cost $510. The call cost $75 more than the put even though it’s equally far away from the stock.
A 20% up move in the stock in the last 3 days has made everyone more hopeful that it will continue going up so why not get on this before it’s too late. This is driving more demands for the $90 calls compared to the $75 puts. I consider this very speculative and basically gambling. This is a scenario where there is more risk to the upside and you could argue that calls are riskier than puts in this case.
2. Options far into the future in individual stocks
This would be like a regular investment in my opinion. I am going to look at Facebook as an example.
Facebook is trading around $316 right now and I am looking at options that expire in June 2023. The $310 put which is $6 out of the money is priced at $5895 while the $325 call that is $9 out of the money is trading for $6320. The call is much further out of the money compared to the put I have chosen but it’s priced higher.
Since the stock market usually goes up over time it only makes sense that calls cost more because they have a higher likelihood of being in the money and that’s where you are going to see demand.
At the same If you are to look at options in the index like SPY, QQQ or IWM, those will still have the puts priced higher because they are going to be used as insurance against the calls like Facebook above.
There is a lot more information when it comes to how options are priced. But the question of whether puts are riskier than calls isn’t something that you should really consider as a blanket statement. There is no one answer that completely satisfies this question.
This really plays into the statement of high-risk high reward low-risk low reward. You can generally look at it as if puts are more expensive, that’s where the risk is perceived to be by the market at that moment and that typically means that’s the direction you can find a higher reward.
Even then you will only enjoy this reward if the stock moves in the direction you want whether it’s a put or a call. When I see a “pricey” put, I’m not thinking it’s riskier. I’m thinking there’s more demand for these puts because people are trying to hedge their long portfolios. And that’s just the cost of doing business.