Welcome to the New and Improved ‘The Dividend Guy’

9 Comments so far

1. Pagar September 25, 2005 11:19 pm

   Just found your blog from reading the
   Youngmiser blog. It looks like one I going to enjoy spending some time reading. While I know a little about stock investing, I know nothing about Canada’s stock market.
   Therefore I own no stocks from Canada, meaning my comments are strictly from what I know about the American stock Market.
   Given that I know nothing about your markets, I am wondering about Covered calls
   which I use a lot. For example, you have talked about Royal Bank of Canada stock which you hold for the dividend. So I looked up the stock on the New York exchange. The option for Nov 05 Call Strike $75 was .50 bid on Fri, 23 Sep 05.
   Just a quick look at the recent pricing vs what I pay with my discount broker, if I already owned the stock, I would probably opt for the Nov 05 call Strike $70 which was at 2.50 bid. With covered calls, the total of one’s return is dividend plus the covered call price. Which should double your return from any dividend stock.
   Again I repeat, I know nothing about
   the Canada stock market, so this is not intended to say that what I suggest will work in Canada, but it works for me. I buy only stocks that pay dividends and one can write covered calls on, except for high yield closed end Funds which are
   already over 10% yield.
   One thing I really like about your blog is the No Mutual Funds rule. I believe when one buys mutual funds, one is paying some fund manager to make you average; that is the best anyone can do with a mutual fund because that’s all one can get out of a fund-the average of what
   that fund owns. My old Social Studies teacher wrote a note on one of the papers
   that I had turned in: “This is average work, you can do much better.” I have tried to apply that to my life.

2. The Dividend Guy September 26, 2005 1:59 am

   Thank you so much for visiting. I appreciate your comments - although I must admit I know very little about covered calls, or other option trades. That being said, options work the same here as they do in the US so I would be almost positive that your strategy could be applied. If anyone else has any input, please feel free to chime in. I plan to investigate options in the future. Any suggestions on where to start learning?

   P.S. I like your “motto”. I am a firm believer in focusing to do your best. It works.

3. Pagar September 26, 2005 12:43 pm

   Thanks for the info on how options work in Canada. One of the best options infomation sites is www.888options.com
   Recommend you go to their site and click on the 1st entry which talks about a webseminar for Wed 28 Sep, talking about covered calls-you need a reservation, so if interested, one needs to sign up quickly.
   One of the reasons I feel options are not more promoted by brokers to conservative investors (dividend investors)is the feeling that options are risky. There are many different option
   strategies, many of them risky.
   I would equate it to driving a car for
   a dividend investor. You can drive a car with no tires (Not Recommended) but you get a lot further using tires. You can get dividends without covered calls, but your income increase is going to be much
   greater using covered calls. The only risk I can see, with a covered call, is that the market rises more than your strike price and the option is called.
   Or market falls and you want to sell. Neither of these actions should affect a dividend investor, who selects good stocks; such as Royal Bank of Canada, for the long haul, and the day to day price
   changes should not affect his decisions.
   Plus, one learns, what one needs to do if
   either of these risks are affecting your
   decisions. Covered call options don’t increase risks for dividend investors,(In my Opionion) any other option strategy probably does.
   I neither use nor plan to use any other option strategy.

4. The Dividend Guy September 26, 2005 3:22 pm

   Thanks for the link, I will check it out.

5. Pagar September 27, 2005 5:29 pm

   I thought of Paper trading Royal Bank of
   Canada, to show a little of how the covered call usage would work. When I look up the symbol for the bank I get RY for the New York Stock Exchange. When I look at Yahoo Finance site for RY. I get the feeling that RY.TO may be the symbol that Canadians would use. When I held FRO (frontline)stock. The stock was said to be a mirror image of the Olso Exchange traded stock. But when I look at the Toronto Exchange, I’m not sure whether we are looking at mirror image or two different stocks. A couple of hours of searching on Google has not convinced me that Canadian Options work like American
   Options. But you certainly have much more knowledge than I do. Could you direct me to where I would find info on Canadian options for Royal bank of Canada. Thanks

6. The Dividend Guy September 27, 2005 6:36 pm

   You are correct that RY.to would be the symbol that investors would use if they were buying Royal Bank on the TSX (one of the Canadian stock exchanges). The ticker on the NYSE is RY.

   As I have very little experience with options, I am sorry I cannot be much help. I believe that Canadian options are traded on the Montreal Exchange. Check out this link for info (http://www.m-x.ca/options-trading.php). I looked up RY on this site and got the options for it. I hope this helps. Let me know how you make out.

7. Pagar September 27, 2005 7:40 pm

   That’s the site I wanted. Thanks, strangely enough, i used a google link earlier today and got a site written in French. Not a language I have much knowledge of.
   The Montreal exchange:
   Price-$86.18 Strike-$90 Jan 06 Option Call-$1.40 (less brokeage fee)I’ll have to check expiration date.

   The New York exchange:
   Price-$73.17 Strike-$75 Jan 06
   Option Call-$2.00 (less brokeage fee)Expiration date=3rd Friday in Jan 06

   My comments: Given the rapid run up in this stock (there is some talk on the Yahoo Finance site about a stock split after the next board meeting-but no hard confirmation) I would not buy at these prices. But if I owned the stock and intended to hold the stock regardless, the call premium would already be in my account.

   I couldn’t spend much time on the Montreal Exchange site,but it did seem to bring up some basic covered call option training info very quickly. Hope all this helps. The more I read on your site the better I like it.

8. Mike Hillyer September 28, 2005 2:37 am

   Congrats on the new site, added you to the blog list at http://www.wealthywiki.com/index.php/Blogs

9. aarp home owners insurance May 30, 2006 10:07 pm

   I can’t believe how nice this site is. Very few comments are wrong, if any at all. I just might share this site with a few friends.I will be back shortly.

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