2022-10 Dividend Income Report

Here is the dividend income report for October, 2022.

The monthly dividend income came out to $467.39. The yearly income total for 2022 through the end of the month was $8762.43.

The income for October, 2021 was $465.25, and the yearly income for 2021 through the end of September was $7376.87.

This is the fourth month that my twelve-month moving average was above $1,000.

The price of bitcon is just above $21,000 today. It was stuck below $20,000 for a few weeks, then jumped up to above $21,000, and since has slightly declined, but still flat. Dave Gerard and Amy Castor both think the price is being manipulated. Given how the economy is grinding along, it is odd how The Answer To All The World’s Problems is in a tight range.

I watched a few episodes of the Rational Reminder channel’s Understanding Crypto Limited Series. I have only watched a few out of order. So far I like them.

It seems like every one has a comment from someone complaining that the guest is anti-corrupt-o-currency and not objective, why don’t they have $SOME-CRAZY-DUDE on? Why should they? There are PLENTY of pro-corrupt-o-currency channels on YouTube. I have not kept track of these commenters, but I wonder if these same commenters are asking those pro-corrupt-o-currency channels to have anti-corrupt-o-currency guests. I would say the corrupt-o-currency crowd doesn’t want an objective discussion. It’s like talking to Jordan Peterson fanboys: context, you haven’t read this, blah blah blah. The hosts are financial advisors; their goal is to do what is best for their clients. If they say corrupt-o-currencies are bad, maybe it is because corrupt-o-currencies are bad. All the pro-corrupt-o-currency people are talking their book, or just old men yelling at clouds. A lot of them are like Donald Trump or Peter Thiel: rich guys who despite all their money are really angry for who knows what reason.

One commenter on the episode with Bruce Schneier suggested Greg Foss: “olearly and foss have strong personalities and have strong onscreen presence and they’ll likely overpower the hosts”. I googled this Greg Foss and looked at a few videos with him on YouTube. He does not have a “strong personality”. He is just an asshole who yells a lot. A lot of people think “loud” means “strong”. It doesn’t. Generally loud people are stupid. You can just nod your head, they think you agree, then they go away none the wiser, not even remembering what they spewed out in the first place. Greg Foss looks like he has never had an actual conversation with anyone. He just yells whatever is brain is vomiting. Can you imagine this guy meeting Alex Jones? They would spend hours yelling at the clouds before noticing each other. News flash: us quiet people can yell back when we need to. Yelling is not a super power.

In one of the videos I saw of Foss, he was going on about the deficit. I pretty much stopped there. These idiots never have a problem with the deficit when conservatives cut taxes for the wealthy. It does not lead to more economic growth, wealthy people do not expand and invest, and the tax cuts do not force conservative governments to spend less. But when a progressive adminstration comes in, oh my god, the debt!! Will nobody think of the children?!?!?! Living life in all caps makes you look stupid. Living life in all caps while sucking up to the wealthy means you are stupid.

A lot of people treat corrupt-o-currency like another speculative asset, even though the world already has a lot of speculative assets; some of them actually have cash flow. Other say bitcon is a hedge against inflation. Isn’t gold a hedge against inflation? Why do we need bitcon when the world has gold? A lot of the bitcon-men do not want to spend their bitcon, they just want to hold it. Warren Buffett pointed out that gold is inefficient: You have to mine it, then you have to store it somewhere secure and pay insurance. So you pay money to dig it out of one hole, and you pay more to stick it in another hole. The bitcon community looked at that and thought: We can be even less efficient than that. Why not just use gold? I guess bitconners really are just misanthropes.

Schneier says that corrupt-o-currency is trying to solve social problems (or what are problems for some people) with technology. The host asked why corrupt-o-currency bros are trying that, and Schneier said, “Because it would be great if you could do that.” It reminded me of the quote from Big Jim from last month: do not confuse the way things are with the way you want them to be.

First one was a programmer named Daniel Mescheder who explained blockchains, bitcon, and proof of work. He had a few points that were also made by another software developer named Stephen Diehl, who authored the articles The Case Against Crypto and Web3 is Bullshit. It all sounds great until you need to have your blockchain interact with the rest of the world. Getting real money in is easy, but getting it back out always seems difficult. It’s like a roach motel for money. Mesheder said some blockchain people want to put land ownership records on the block chain. But if he claims your land, he cannot just wave his blockchain at you. We need some sort of real-world enforcement, or some way to resolve disputes. And if you are relying on someone for enforcement, can’t you rely on them to store the data on the chain? One issue he did not mention is: what is to stop someone from making another blockchain for the same land? Diehl mentioned multiple coins. There have been some blockchain/coin companies that paid people in their tokens instead of dollars. Diehl compared this to wildcat banking. I do not want to pay every monthly bill in another currency.

The topic of immutability came up a few times. Ethereum rolled back a hack, so it’s not really immutable. The only reason bitcon is immutable is that nobody wants to roll back. But it’s all just stuff people made up; they could roll it back. The reason that will not happen is that a lot of people are invested (literally and metaphorically) in the status quo. Bitcon is just “too big to fail”. The sort of problem with the current financial system that bitcon was supposed to solve.

Another episode was with David Gerard. As you can imagine, he said there was no point in any of this.

A lot of the justifications for corrupt-o-currency are circular reasoning. One justification for blockchain is to manage “digital assets”. But nobody was talking about digital assets until blockchain. So we need the blockchain to manage what is on the blockchain.

In other news, Kroger buying Albertsons, and the PE firms that own Albertsons are paying themselves a dividend (discussion on Hacker News; some states are trying to stop the “dividend”). Per the linked article on HN, the $4B extraction is about all the cash Albertsons has on hand. The PE firms have owned Albertsons for 7 years. If they haven’t made a profit, it’s their own fault. Paying out all your cash at once is stupid. It’s like they looked at Elon Musk buying Twitter and said, “We can top that.” I think we should stop calling these one-time payments “dividends” and call them extractions, or bloodlettings. Just as there are public benefit corporations whose charters say they have to be run in a sustainable manner, perhaps there should be a type of corporation that is centered on long-term sustainable dividends and prohibits stock buybacks.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each October from 2011 through 2022:

Month YTD Amount 3MMA 12MMA
2022-10 $8762.43 $467.39 $948.63 $1028.09
2021-10 $7376.87 $465.25 $838.41 $922.01
2020-10 $6854.28 $195.26 $745.73 $879.26
2019-10 $6777.52 $291.83 $822.53 $761.86
2018-10 $4606.91 $1130.39 $561.66 $583.77
2017-10 $5138.63 $341.83 $566.34 $556.11
2016-10 $4541.79 $281.09 $508.05 $496.43
2015-10 $4056.72 $312.23 $459.42 $438.15
2014-10 $3236.89 $243.87 $368.19 $340.32
2013-10 $2558.86 $184.81 $295.19 $291.08
2012-10 $2650.92 $225.14 $285.46 $284.35
2011-10 $2330.68 $208.90 $258.17 $238.44

Here are the securities and the income amounts for October, 2022:

  • Vanguard Utilities ETF: $295.86
  • Vanguard Total Bond Market ETF: $160.25
  • Vanguard Total International Bond ETF: $11.28

Big Jim encourages strangling loud people. They deserve it.

Painting of the Temptation of Christ by Tobias Verhaecht (1561–1631); image from Wikipedia, assumed allowed under public domain.

2022-09 Dividend Income Report

Here is the dividend income report for September, 2022.

The monthly dividend income came out to $2159.15. The yearly income total for 2022 through the end of the month was $8295.04.

The income for September, 2021 was $1842.58, and the yearly income for 2021 through the end of September was $6911.62.

This is the third month that my twelve-month moving average was above $1,000.

There is not a whole lot to say about my stocks.

VPU was late again. I wish that iShares would lower the cost of IDU, or that State Street would come out with another utilities ETF besides XLU. State Street has lots of sector ETFs besides their S&P 500 SPDRs; for some reason utilities is the only sector without a non-SPDR ETF.

WRT bitcon: at the end of last month it was at $19K. Then throughout the month it hovered around $18K, up to $20K, and now it is slowly going back down to $19K. I watched David Gerard’s August appearance on the Rational Reminder podcast. He pretty much said it’s all just fraud; that is the only use case. He also point out that bitcon’s peak was when Elon Musk talked about bitcon. I don’t know if him talking about corrupt-o-currency was the cause of the peak, and DG did not really go into that too much. I would not be surprised if it never goes above $25K again. Granted, I might be wrong; there is no shortage of either predators or desparate people. DG said a good book about bitcon and corrupt-o-currency was written in 1841: Extraordinary Popular Delusions and the Madness of Crowds.

I did ask on Hacker News how is the Lightning Network supposed to help. I got a couple of responses; you can see them at the link. My question was: Bitcoin advocates say that the BTC network has to be slow to be secure and decentralized. If you start putting transactions on a second blockchain, don’t you lose all the security/validation of the BTC blockchain? One of the answers pointed out that LN is not another blockchain. It seems like a lot of bitcon fanboys want to have it both ways: Bitcon is the answer to all our problems, until it’s not. You can look at the answers for yourself, but I am not convinced the circle has been squared. Or if it has, then what is the point?

What if you get scammed on the LN? Don’t you lose that money forever when the transactions are moved to the bitcon blockchain? Who backstops the LN? And why would I want to deal with sats (which I am guessing is short for Satoshis)? My life is complicated enough with one currency. Maybe that is the issue in a nutshell: The corrupt-o bros think they can make all of this easy. But ultimately it is not easy.

And even if corrupt-o-currencies become the norm, I think one condition will be that society will wind up building a parallel financial ecosystem just as complicated as we have today.

WRT LN not being another blockchain: if they only way to make the blockchain useful is to not use the blockchain, why should I bother with the blockchain in the first place?

And when your currency is touted by a jackass who calls himself a dictator, then do not talk to me about how bitcon is freedom. Maybe if Bukele had two brain cells talking to one another, he would have thrown the gang leaders in jail while he was making deals with them.

Bitcon seems like an online version of Glibertarian’s paradise. These experiments tend to fail (see here and here for two examples). Like DG, I predict that the Bitcoin City in El Salvador will not amount to much of anything.

While looking into Bitcon City and the various attempts to create Galt’s Gulch, I found some pages about a guy named Doug Casey, who created La Estancia Cafayate. I think this is the site for the community. There is also an article in the New York Times here. It seems to talk a lot about wine and golf, but no glibertarian buzzwords. There is a page here about a couple from South Africa looking for “freedom” and who mention Doug Casey’s writings. The site is for a broker names Terri Casey, who I assume is Doug Casey’s wife. The post has “Part 1” at the end of the title, but there is no Part 2 on the page with posts. Perhaps Mrs Casey needs to cut back on the wine.

I found out about Doug Casey on a site called International Man. Interestingly enough, the posts are not dated. There is one that predicted another Great Depression will hit full force in 2017. Evil fell upon us in 2017, but not an economic depression. I am at a point where I reject doomsayers who never admit they are wrong. I also do not trust sites that sell something and give no physical address. Maybe talking about wine and golf and villas for sale is a way to admit you were wrong without actually having to use those words. Maybe that is freedom and liberty are now: a place for old people to complain for half price.

I did not read all the articles on International Man (I have better things to do). Maybe he never intended it to be a place where people are productive, have jobs and run companies. But those glibertarian paradises never work out either. It is bizarre because a lot of the guys pushing these do tend to be wealthy and successful in some industry. Yet these git-er-done types fail when building a society or community.

Sometimes these guys all sound a lot like disaster preppers: Instead of just coming up with a plan to walk away from society (or prepare for its demise), why not put some thought into improving it somehow? Can putting too much energy into preparing for some negative outcomes make them more likely? If the corrupt-o-currency bros can get the world to talk about this thing that most people do not understand, then you can get some serious regulations through Congress, like the kind that worked for about 60 years.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each September from 2011 through 2022:

Month YTD Amount 3MMA 12MMA
2022-09 $8295.04 $2159.15 $863.88 $1027.91
2021-09 $6911.62 $1842.58 $749.74 $899.51
2020-09 $6659.02 $1836.64 $750.42 $887.30
2019-09 $6485.69 $2112.65 $744.85 $831.74
2018-09 $3476.52 $506.44 $430.49 $518.06
2017-09 $4796.80 $775.50 $562.76 $551.05
2016-09 $4260.70 $720.86 $505.47 $499.02
2015-09 $3744.49 $659.59 $443.06 $432.46
2014-09 $2993.02 $536.75 $353.04 $335.39
2013-09 $2374.05 $395.65 $293.78 $294.44
2012-09 $2425.78 $315.21 $283.66 $283.00
2011-09 $2121.78 $243.26 $256.81 $233.01

Here are the securities and the income amounts for September, 2022:

  • Vanguard Total Bond Market ETF: $160.28
  • Vanguard Total International Bond ETF: $11.02
  • SPDR S&P Dividend ETF: $846.89
  • SPDR Dow Jones REIT ETF: $294.45
  • SPDR Dow Jones REIT ETF: $147.88
  • SPDR S&P Global Dividend ETF: $650.06
  • Global X S&P 500 Covered Call ETF: $48.57

 

Big Jim says there is more to preserving freedom than opting out.

“Immaculate Conception” by Peter Paul Rubens (1577-1640); image from Wikimedia, also available on his website or Museo del Prado; assumed allowed under public domain .

2022-08 Dividend Income Report

Here is the dividend income report for August, 2022.

The monthly dividend income came out to $219.36. The yearly income total for 2022 through the end of the month was $6135.89.

The income for August 2021 was $207.39, and the yearly income for 2021 through the end of August was $5069.04.

This is the second month that my twelve-month moving average was above $1,000.

This is not the time on Sprockets when we dahnce, but it is the time when we talk about the stupidity of corrupt-o-currency.

There is a lot of debate over whether or not we are in a recession. A lot of people are using the colloquial definition of two quarters of shrinking GDP. The National Bureau of Economic Research has more criteria: real GDP, real income, employment, industrial production, and wholesale-retail sales. Employment right now is strong, and I think sales are also up. In general, most indicators are pointing in the same direction. I think one issue is we are in a transition period where some indicators are good, and some are bad. I suppose there is always a transition period when we go from expansion to recession or vice versa, but this transition period feels like it is grinding very slowly.

I think long-term things will improve. Raising rates will get rid of inflation. But it could cause a recession. Long-term gain, but short-term pain. How short-term? And for whom? Shouldn’t a store of value like bitcon be rising in a time of uncertainty and transition like this? At the end of last month, it was $23K. Then it went up to $24K. For the past week it has been hovering around $20K. Are there wash trades to keep it above a nice, round number?

There are floods in Pakistan that made about 15% of the population homeless, the war in Ukraine is affecting energy prices and generation throughout Europe (in addition to all the problems it is causing for Ukrainians), the world is still having supply chain issues, the whole globe is dealing with drought and inflation, and it is looking like the previous president has been selling state secrets. The world is falling apart. Why isn’t bitcon soaring? It was supposed to be the thing that was to keep humanity free from tyranny. It was supposed to be hope. But it looks like it is losing steam right when people need something to be hopeful about. I have heard “any day now” from executives and managers. I have heard “just wait” from women who left my life in tatters. I heard “soon” from lying pastors and corrupt martial arts masters. This is the tomorrow when you said things would be different.

One of the arguments that corrupt-o-currency pushers use is that corrupt-o is good because there are more and more people buying corrupt-o. People still shoot themselves in the face. People get drunk and choke on their own vomit. People still support Donald Trump. Just because a lot of people are doing something does not make it a smart thing to do. As David Gerard and Wolf Street pointed out, a lot of this “corrupt-o-currency goes mainstream” was really a lot of corrupt-o companies investing their blockchains/coins/tokens/NFTs/web3-things in other corrupt-o companies’ blockchains/coins/tokens/NFTs/web3-things. It turns out that a bunch of snakes eating each other’s tails is no different than one snake eating its own tail. All the houses of cards were connected, so they all fell at the same time.

There is no income stream. Why are people still talking about this? And now electricity prices are going up while the price of crypto is going down, according to Wired magazine. Some miners funded their ASICs with debt, and instead of HODL-ing forever (which never makes sense for any asset), they are selling. The bitcon fanboys thought bitcon was different, but it turns out nothing has changed. Assets with no cash flow are worthless. And the world does not owe miners a minimum price based on the miners’ costs. Bitcon mining is like filling your bathtub with cement and demanding the world give you money.

However, I do think there is one good use of bitcon: It is an IQ test and an ethics test in one package. If you are pro-bitcon, you are both stupid and a terrible person. End of discussion.

Granted, since this is bitcon, there are probably more efficient ways to test someone’s IQ and ethics at the same time. Maybe that is the cynic’s definition of bitcon: finding the most wasteful way to tell the world what stupid, horrible person you are, and defending it until the bitter end.

In other news, the Federal Reserve is finally raising rates. I can understand why rates were kept low during and immediately after COVID, but I thought that they would have gone up between 2012 and 2019. One thing that bugs me is that a lot of people blame all the bad things that happen on “the Fed”. Even people on sites that I generally respect, like Wolf Street (mostly the commenters, not Wolf himself). I call bull. Nobody forced anyone to put money into meme stocks. Or unicorns that do not make any money. Or corrupt-o-currency. People chose to do those things. I have stuck with dividend growth stocks. I might not be doing as well as the people who are subjects of articles with titles like “Minimum Wage Janitor Retires With Millions Thanks to Dividends”, but I am doing alright. If people got greedy and stupid, it’s not the Fed’s fault.

I will say one thing for Powell: He deserves credit for not lowering rates until COVID. Trump was blathering on that rates were too high and needed to go down. Trump also owes a lot of debt to a lot of banks. He didn’t want rates to go down because he thought it was good for the economy, he was just crying his own book.

I don’t think they will have to raise rates to the same level that Volker did to tame inflation. People and corporations have a lot more debt now than they did in the 1970s and 1980s.

WRT unicorns that never make money: One commenter on Hacker News pointed out that many of the VC firms are not just investing, but pushing a glibertarian world-view. Why else would somebody be dumb enough to give money to Adam Neumann from WeWork? Maybe he should call his next company WeBezz, from John Kenneth Galbraith’s term “the bezzle”. He defined it as the period when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth. Perhaps corrupt-o-currency and the VC/startup world are just a big “re-bezzle”: Nobody thinks any of it will amount to something, and all the participants at each step are just looking for someone else they can leave holding the bag; nobody cares about building a company that will last, they all just want to flip. Which is totally in line with the cynical definition of glibertarianism: I have the freedom to be rich, and you have the freedom to be poor.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each August from 2011 through 2022:

Month YTD Amount 3MMA 12MMA
2022-08 $6135.89 $219.36 $1195.56 $1001.53
2021-08 $5069.04 $207.39 $856.33 $899.01
2020-08 $4822.38 $205.28 $790.58 $910.30
2019-08 $4373.04 $63.10 $788.78 $697.89
2018-08 $2970.08 $48.14 $549.51 $540.48
2017-08 $4021.30 $581.69 $558.23 $546.50
2016-08 $3539.84 $522.20 $493.44 $493.92
2015-08 $3084.90 $406.45 $427.26 $422.22
2014-08 $2456.27 $323.94 $348.41 $323.64
2013-08 $1978.40 $305.11 $279.05 $287.74
2012-08 $2110.57 $316.04 $280.53 $277.00
2011-08 $1878.52 $322.35 $254.56 $225.45

Here are the securities and the income amounts for August, 2022:

  • Vanguard Total Bond Market ETF: $156.71
  • Vanguard Total International Bond ETF: $11.10
  • Global X S&P 500 Covered Call ETF: $51.55

 

Big Jim says amateurs talk capital gains; professionals talk income streams.

“Adoration of the Magi” by Altichiero da Verona (c. 1330 – c. 1390), aka Aldighieri da Zevio; image allowed under public domain.

2022-07 Dividend Income Report

Here is the dividend income report for July, 2022.

The monthly dividend income came out to $213.12. The yearly income total for 2022 through the end of the month was $5916.53

The income for July, 2021 was $199.25, and the yearly income for 2021 through the end of July was $4861.65.

It is looking more and more like I will be leaving my current employer at the end of the month. They do not have any positions in the technologies that I am interested in. I have tried studying other things on my own, but things get in the way, or I lose energy, or something happens. Getting a new job is a job. I already have one. I do not want another.

So I will probably be rolling over my Roth 401K into my Roth IRA. This will increase my dividend income substantially. Granted, it will also decrease my savings. I do not know how bad inflation will be or how long it will take to get a new job. But I am not jumping off a cliff unprepared.

I will sell what I have in my regular IRA and buy the same amount of shares of those ETFs in my Roth IRA. I think I will then use my regular IRA for REITs and individual stocks, or perhaps ETFs that I would not ordinarily buy (like ETFs specific to a country or industry). But no corrupt-o-currency.

The big news in corrupt-o-currency and buttcoin is that Michal Saylor is resigning as CEO of MicroStrategy. He founded MSTR in 1989. Allegedly their main business is business intelligence and analytics software. In 2020, he decided that MSTR should stop holding cash, and instead put its money into buttcoin. MSTR is the largest known corporate holder of buttcoin. (Or should I call it bitcon?)

I have never heard of MSTR until Saylor got into bitcon. Then it seemed like all he ever talks about is bitcon. There several videos on the MSTR Youtube channel about bitcon. He tweeted today that “Since @MicroStrategy adopted a #Bitcoin Strategy, its enterprise value is up +730% (+$5 billion) and $MSTR is up +123%. Performance of BTC is +94%, S&P 500 +23%, Nasdaq +13%, Gold -13%, Bonds -14%, Silver -29%. GOOG +54%, AAPL +43%, MSFT +34%, AMZN -14%, META -39%, NFLX -53%.” What does that have to do with BI and analytics? Is a potential client going to say, “Well, your competitors’ software products actually give us more useful information than yours, but since you are in bitcon, we will sign with you”?

I did look at some of their quarterly reports. For the past several quarters they had impairment charges for bitcon. I have not looked at every earnings presentation ever, but I have seen quite a few. Other firms do not talk as much about their cash holdings as MSTR talks about bitcon. Are these guys interested in BI software? If I were looking for BI software, I would look for a vendor that just talks about that. Do not go off-topic. And if you are talking about bitcon, then you really are an idiot.

Saylor’s twitter profile pic shows lasers coming out of his eyes. Is this guy mentally ill? Note to corrupt-o-currency advocates: If this was all meant as a big joke, this all got old before it ever got funny.

When Twitter came out, it seemed totally pointless. Then after a couple of years people started posting links to new pages on their websites, their latest YouTube videos, and live tweeting events. I think it is fair to say that we are past the time that bitcon advocates can get away with telling us bitcon or corrupt-o-currency or blockchump will change the world. Very few people are using it for purchases. Why would I want to use bitcon to buy things? I like doing everything in one currency. I am not dealing with people in other countries. Why make my life more complicated? It is not a store of value. Things are looking worse in general, and bitcon is about a third of what it was 9 months ago (it reached an adjusted close of $67,566.83 on 2021-11-08; it’s adjusted close on 2022-08-02 was $22,978.12). Farmland is also described as a “store of value“, and it is going up; it also produces an income stream. A lot of articles about the different coins use terms like “support” and “resistance”, just like technical analysis for stocks. I thought bitcon was supposed to be something new and different, but it’s just another tradable instrument. We already have plenty of those.

The bitcon paper came out in 2009. That was 13 years ago. Thirteen years is a significant portion of the human lifespan. We have been hearing “any day now” for a long time. Enough was enough a long time ago. We get it. You are all misanthropes. Get over yourselves.

I think corrupt-o-currency fanbois are like glibertarians. Glibertarians say they want less government; what they really want is to be in charge. Bitcon fanbois are upset they aren’t calling the shots.

I find it odd that bitcon fanbois rant about “fiat” currencies, yet they are all-in on an asset that some random person (whose identity has never been verified) just made up. The only reason that bitcon has “digital scarcity” is just because everyone has agreed to abide by an anonymous white paper. There is really nothing objective about any of this.

And before any fanboi tells me that I don’t get it and I should read this or listen to that: Do not bother. I do not have to understand this. I didn’t ask for it.

I did look at the bitcon paper. I didn’t get past the first page. It said that if we could get rid of intermediaries, we could have non-reversible transactions and we would all save money. There are at least two problems here. Non-reversible transactions is only a good thing if you are a scammer. Most people do not understand finance or technology. A no-recourse financial system would be a disaster. The other issue is that bitcon is not less expensive. Compare the number of transactions Visa does versus the bitcon network.

In other news, I saw an article that more people are looking at bonds and dividend stocks and ETFs. Will they stick with dividends when things turn around? Or will they be tempted once again by the sweet siren song of capital gains?

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each July from 2011 through 2022:

Month YTD Amount 3MMA 12MMA
2022-07 $5916.53 $213.12 $1172.98 $1000.53
2021-07 $4861.65 $199.25 $840.85 $898.84
2020-07 $4617.10 $209.33 $781.84 $898.46
2019-07 $4309.94 $58.79 $818.06 $696.65
2018-07 $2921.94 $736.90 $548.35 $584.94
2017-07 $3439.61 $331.08 $541.56 $541.54
2016-07 $3017.64 $273.36 $464.99 $484.27
2015-07 $2678.45 $263.13 $412.44 $415.35
2014-07 $2132.33 $198.43 $333.77 $322.07
2013-07 $1673.29 $180.57 $258.23 $288.65
2012-07 $1794.53 $219.72 $261.24 $277.53
2011-07 $1556.17 $204.83 $235.96 $211.69

Here are the securities and the income amounts for July, 2022:

  • Vanguard Total Bond Market ETF: $151.73
  • Vanguard Total International Bond ETF: $161.52
  • Global X S&P 500 Covered Call ETF: $213.12

 

Big Jim says there is nothing wrong with being serious in a world full of problems.

“Study for Moses and the Burning Bush” by Henry Ossawa Tanner (June 21, 1859 – May 25, 1937); image from Smithsonian Institute, allowed under public domain.

Note: Adjusted close prices were taken from Yahoo Finance, and were valid on 2022-08-29; they may change in the future.

 

2022-06 Dividend Income Report

Here is the dividend income report for June, 2022.

The monthly dividend income came out to $3154.20. The yearly income total for 2022 through the end of the month was $5703.41.

The income for June, 2021 was $2162.36, and the yearly income for 2021 through the end of June was $4662.40.

The total was not only better than last June. It was better than July and August. WDIV has a pattern of paying $400 one quarter, then $1000 or more the next quarter. This was one of the good quarters. XYLD paid twice since the May payment usually gets carried over into June. RWR paid twice because I have it in two accounts; first I bought some shares in the wrong account, then I decided to buy some more in the account I originally wanted them in the first place when the price got lower. The first set of RWR shares have lost about 25% of their value. I know I always say that we should focus on income more than price, but I still hate losing money. I will hold on until the income puts the value of the shares above what it was when I bought it.

Last month I predicted that my dividend income might go down. I assumed that was because if there is a recession, a lot of companies would go under. I think it is just as likely to go up. If prices are higher that money has to go somewhere. I am not seeing more in my paycheck.

I still believe the basic point of last month’s essay: If you invest in a new area, you are probably going to get hosed. Invest in survivors and incumbents. You might not make as much money as whoever is lucky enough to pick this cycle’s winners, but you are less likely to get hosed.

I think anything to do with corrupt-o-currencies or NFTs is a scam and I think it should all die in a fire. It is bad for the environment. It is designed to be inefficient. If all the buttcoin miners doubled their mining capacity, the hash rate would decrease. This is something to keep in mind the next time they compare it to the rest of the financial system. Ark Investments (Cathy Woodshed’s firm) tried to debunk some buttcoin “myths”, and they addressed the energy issue. And I think they failed miserably. According to the article, Traditional banking emits 1,368 Megatonnes (Mtoe) of carbon per year and gold mining emits 144 Mtoe. Bitcoin emits 61 million Mtoe, less than 5% and 45% of traditional banking and gold mining, respectively. But what about energy costs taking into account the number of transactions? Yes, buttcoin is using far less energy overall, but then doesn’t buttcoin have fewer transactions than the traditional banking system? What is the “per-capita” energy use of Bitcoin vs traditional banking? I think the rate of a buttcoin block being validated every 10 minutes is fixed forever. So if the miners throw more capacity at the blockchain, they won’t get anymore transactions. If anybody else on the planet increases capacity, they get more output. Bitcoiners love to tout that miners are looking for more renewables energy sources. They kind of have to. And there is nothing to stop everybody else from using more renewable energy.

I hate it when buttcoin fanboys respond to the energy criticism by saying things like, “What about all the energy used for video streaming, or porn, or playing games?” Again, those servers can become more efficient in ways buttcoin cannot. Also: Gamers, streamers and “actors” are not going around claiming to be the only thing standing between humanity and tyranny. Given how things are going, tyranny seems to be winning over buttcoin. Plus: no planet, no freedom.

I am not clear exactly what the Lightning Network is; I think the idea is to make buttcoin transactions faster by doing transactions on another blockchain. I thought buttcoin is supposed to prevent double spending by putting all transactions on one chain. LN sounds like an admission of failure: “Bitcoin is great! As long as we have this totally different thing on top of it.” I think if corrupt-o-currencies can ever work as actual money that is used by Main Street, you would need to add so many layers you basically have something like what we have now.

There are also issues with keys. I don’t know how common this is anymore, but there are plenty of stories of early adopters looking for hard drives in dumpsters and landfills because those hard drives had their wallets. I know VCRs are out of date, but a lot of people had the blinking twelve problem. That is the level of technological sophistication that most people have. A no-recourse financial system is not the answer. I do not want to be the bank.

They also tried to rebut the myth associating buttcoin with crime. If you read the original buttcoin paper, the entire point was to make a payment system for non-reversible transactions. If you get scammed or have to pay a scammer with buttcoin, you will never see that money again. So crime is a bigger issue for buttcoin than the conventional financial system.

For about three decades after WWII we had strong regulation of the banks. Some of the regulations started in the Great Depression. Then Saint Ronny came along, and he started deregulating. Now things seem to keep falling apart on a regular basis. I read somewhere that Glass-Steagall was in place for 65 years, then less than a decade after repeal we had a crisis. I am sure that a lot of crypto-bros will say that regulation is not the answer, but I think that is circular reasoning. It is amazing that they have gotten people to talk about this in everyday conversation. If you can do that, then I think you can shift people’s mindset about regulation. Reducing corporate influence on government is the answer. If the crypto-bros actually replace governments and the current financial system, then THEY are The Man, and we are back where we are now.

When I read articles or tweets online buttcoin sounds like another speculative asset. “I bought at X and now it is at Y.” The world already has speculative assets. We do not need another.

And it won’t work long term as a currency anyway. There is a hard limit on the number of bitcoins (at least now there is). So when all the buttcoins are mined, prices in buttcoin will be subject to deflation. Economies stagnate in deflation. And how will the miners make money when all the coins are mined? “Transaction fees” we are told. Since prices will be going down, I predict the fees will go up. People hate paying fees.

WRT “blockchain”: The only reason anyone talks about blockchain is because after people started asking what is the point of buttcoin, we were told that the magic isn’t buttcoin itself, but the blockchain. Blockchain advocates tell us that logistics and supply chains are the killer use case for blockchains. Then why haven’t we heard more about them? There have been a lot of changes in industries (and thus their supply chains) in the past decade: incumbent auto companies making electric cars, oil and gas companies increasing fracking, utilities increasing utilization of renewable energy. New products, new components, new vendors, new supply chains. If blockchain makes it all better, surely they would be using it, and surely word would have filtered out.

I did find a few pages about Walmart Canada using blockchain with their suppliers. There is a page about it on Havard Business School’s site. The company providing the blockchain is DLT Labs. They are using a private blockchain built with Hyperledger Fabric. DLT Labs’ news page really pushes Walmart and a mining company called Teck Resources Limited. So a decade has gone by and we have two examples. I think blockchain is here to stay, but in a much smaller capacity than its advocates hoped. And even if it succeeds, it could still lead to some bad consequences. As a commenter on Hacker News put it: all the blockchain proves is that someone said they’d shipped you a box, you could still open it and find it full of rocks. If the blockchain vendors can solve that problem, now we have the building blocks for an insurmountable police state on a slowly boiling planet. (You said you were here, but we can prove you were there.) Thanks Satoshi!!

FYI: Walmart is using proof-of-stake since it uses less energy.

NFTs are proof that all of this is a solution in search of a problem. The only way to really make sense of NFTs is that you are spending money so you can say you spent money.

I don’t know if they have done this, but I can see Saturday Night Live doing a commercial for buttcoin like a pharmaceutical ad: Do you have more money than brains? Do you want to be one of those old men shaking their fists and yelling at clouds? If you answered yes to either of these questions, bitcoin might be for you.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each June from 2011 through 2022:

Month YTD Amount 3MMA 12MMA
2022-06 $5703.41 $3154.20 $1190.56 $999.37
2021-06 $4662.40 $2162.36 $861.08 $899.68
2020-06 $4407.77 $1957.12 $778.78 $885.91
2019-06 $4251.15 $2244.44 $959.55 $753.16
2018-06 $2185.04 $863.49 $319.68 $551.12
2017-06 $3108.53 $761.91 $539.42 $536.73
2016-06 $2744.28 $684.76 $464.00 $483.42
2015-06 $2415.32 $612.21 $411.83 $409.95
2014-06 $1933.90 $522.86 $333.10 $320.58
2013-06 $1492.72 $351.48 $257.79 $291.91
2012-06 $1574.81 $305.84 $260.85 $276.29
2011-06 $1351.34 $236.50 $235.38 $203.23

Here are the securities and the income amounts for June, 2022:

  • Global X S&P 500 Covered Call ETF: $50.88
  • Vanguard Total Bond Market ETF: $150.74
  • Vanguard Total International Bond ETF: $9.51
  • SPDR S&P Dividend ETF: $830.85
  • SPDR Dow Jones REIT ETF: $115.70
  • SPDR Dow Jones REIT ETF: $230.37
  • SPDR S&P Global Dividend ETF: $1468.04
  • Vanguard Utilities ETF: $248.92
  • Global X S&P 500 Covered Call ETF: $49.19

Big Jim verified this article with an algorithm called Proof of Jim.

13-th century fresco by Manuel Panselinos (aka Μανουήλ Πανσέληνος); image from Wikimedia, assumed allowed under public domain.

2022-05 Dividend Income Report

Here is the dividend income report for May, 2022.

The monthly dividend income came out to $151.63. The yearly income total for 2022 through the end of the month was $2549.21.

The income for May, 2021 was $160.93, and the yearly income for 2021 through the end of May was $2500.04.

I did not buy or sell anything this month. I placed an order for more RWR that got filled faster than I anticipated.

The stock market is down, inflation is up, and a lot of people are predicting disaster. A lot of people are predicting a depression.

The problem is there are a lot of people predicting depression all the time. Then when things start getting shaky (like now), they think they are vindicated. Despite spending more time being wrong than being right. I don’t know what will happen. But I don’t think we will have a depression. I don’t think the boom times will be back soon. Some companies will go under. Some people will lose their jobs.

But some companies will still be making money. And they will still pay dividends. And some will keep increasing their dividends. Just like during the dot-com boom and bust. Just like during the Great Recession. Just like during the Coronavirus crash. Granted, I might be wrong this time. I know people love to say past performance is no guarantee of future results (even though past performance is usually their argument), but it does feel like the same thing over and over again. History does not repeat, but it rhymes.

Perhaps my dividend income will go down. Perhaps I will lose my job. But I have been through this cycle before. In the mid-2000s, first people told me I was stupid for not buying a house. Then they wanted me to buy their house. This time you were dumb if you did not buy the cash-burning unicorns or corrupt-o-currencies. When will people learn that relying solely on price is a game of musical chairs?

There is a line that Jeff Bezos has used a few times: Instead of asking what will change in 10 years, ask what will not change in 10 years (links here and here). Wise words, but a bit odd coming from a guy who builds rockets and made a bookseller into the largest cloud computing provider. What has not changed is that it is better to invest in companies that have a consistent cash flow stream that they share with investors in the form of dividends. I do not think that buybacks actually return cash to shareholders; they only do if your shares are bought. And companies tend to borrow for buybacks, and buy when the price is high. I have no idea why they keep doing this. There is a lot of cargo culting in Corporate America.

Granted, Amazon and Bezos also do a lot of things I disagree with: Buybacks, not paying workers well when your largest shareholder is a billionaire stupid enough to let a women as beautiful as Mackenzie Scott get away. (Advice to Jeff Bezos: You’re short, you’re bald, you have one eye bigger than the other, and you have an image as a greedy asshole, so watch your money carefully and be nicer to Charo if she becomes wife #2; also: you’re supposed to leave your wife for a younger woman, dipstick).

There is nothing wrong with taking some advice from someone and ignoring other things they say. One of the first authors who turned me on to the idea that you should focus on cash flow and not capital gains was Robert Kyosaki in Rich Dad, Poor Dad. Granted, he also pushed silver and putting everything into a shell company in that book. There is an analysis of Rich Dad, Poor Dad by they third-most-famous John Reed (not the Senator, and not the CEO of Citibank, but the other one). John Reed #3 got sucked into the whole “Obama will make us Weimar Germany” BS, so take him with a grain of salt as well. In fairness, if you can show Mr Reed #3 he is wrong about something, he does seem like the type of guy who would admit to being wrong.

I do not know much about real estate. I defer to Mr Reed #3 on that. I remember Kyosaki’s advice about using a corporation to shield your assets seemed shady. I do not remember if I had any opinion on the rest of RK’s book, but it did not make me want to get involved in real estate. In fairness, the notion of investing in stocks solely for capital gains was (and is) so entrenched in our culture, that even coming from a con man it is a revelation. I think RK is right about this point. (Mr. Reed #3 says that RK changes his story a lot.) I also came across the idea of investing for cash flows and not price appreciation in an article from Motley Fool that I have mentioned before on this site: The Secrets of 9-Figure Fortunes.

Back to what Bezos said about what hasn’t changed in 10 years: I think we will see the same cycle as before. People who think it’s all about finding someone else to hold the bag will get hosed. Meanwhile, most companies that pay dividends will continue to do so.

While this site does have a disclaimer, I think anyone can build some wealth slowly over time. It is the people who promise quick riches who can get you into trouble. Stick to profitable companies with cash flow. Leave the sexy stuff to people with money to lose. Forget about “disruption”. Who keeps telling us that we should invest in “disruptive” companies? The VCs. For these companies, our “investing” is the VCs cashing out. The same people who pushed internet companies that didn’t make any money 20 years ago. Who have been pushing “unicorns” for the past decade that haven’t made any money. And now they are pushing corrupt-o-currencies, blockchain and NFTs on everyone. They push companies that do not make any money, and tell the rest of us that the world has changed and “you just don’t get it”. Then it all comes crashing down, and it turns out we do.

The problem with investing in disruption is not all the disruptors last or make money. Some of them become the new incumbents, and eventually do make money. Incumbents tend to stick around for a long time. Let the market tell you where the money is.

Look at the dot-com boom and bust. Except for Amazon and eBay, most of the companies that everybody thought were going to change the world went bust or got bought by someone bigger. The real change from the dot com boom wasn’t the “new economy” web companies displacing existing corporations; the change was that existing corporations learned to be more efficient using the web.

If corrupt-o-currencies become mainstream (which I think is highly unlikely), they will not displace banks. They will be absorbed by banks.

Andreeson Horowitz (aka “a16z” amongst the cool kids) are backing a crypto startup with Adam Neumann, known for one of the biggest pre-IPO blow-ups of all time. VC, crypto, greenwashing and a con man: It’s like they are trying to sweep Asshole Bingo in one move. If they could incorporate SPACS, Cathy Woodshed, Uber and Facebook they could cause a Fraud Singularity that would open a rift in the space-time continuum that could revive Bernard Madoff and put Enron back together. An article on Coindesk notes that the a16z/Neumann deal may have happened before the world starting cracking apart, but isn’t the whole selling point of VCs that they can see around corners? (Additional articles on TechCrunch here and here.)

Also: We have rising interest rates, rising inflation, a sinking stock market, supply chain chaos, conflict in Europe, and just about everybody thinks a recession by the end of the year is more likely than not. Isn’t this the sort of environment in which corrupt-o-currencies should be soaring? Yet they are not. Even with all the bad news, “Bitcoin at $1 million” sounds and feels like “Gold at $5000” did in the 2000s.

What won’t change in ten years? The S&P Composite 1500 will still be around, filled with companies that meet the “financial viability” criteria, and VCs will be pushing garbage. If you want to invest in a new industry, wait until after the crash and invest in the survivors. As Ron DeLegge pointed out, the point of investing is to make money. Not to have fun, or because it’s educational. Not for the memes or the lulz. But to have more money in your pocket, especially when the hype comes crashing down.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each May from 2011 through 2022:

Month YTD Amount 3MMA 12MMA
2022-05 $2549.21 $151.63 $750.34 $916.72
2021-05 $2500.04 $160.93 $742.94 $882.58
2020-05 $2450.65 $179.08 $747.49 $909.85
2019-05 $2006.71 $150.95 $592.51 $638.08
2018-05 $1321.55 $44.66 $398.51 $542.66
2017-05 $2346.62 $531.68 $553.90 $530.30
2016-05 $2059.52 $436.85 $479.79 $477.37
2015-05 $1803.11 $361.99 $411.92 $402.51
2014-05 $1411.19 $280.01 $304.77 $306.30
2013-05 $1141.24 $242.65 $260.91 $288.11
2012-05 $1268.97 $258.15 $257.13 $270.51
2011-05 $1114.84 $266.55 $233.03 $194.61

Here are the securities and the income amounts for May, 2022:

  • Vanguard Total Bond Market ETF: $143.12
  • Vanguard Total International Bond ETF: $8.51

Big Jim might be wrong, but he’s not asking for your money.

Fresco of the Annunciation in the Saint Sophia Cathedral, Kyiv ; image from Wikimedia, assumed allowed under public domain.

2022-04 Dividend Income Report

Here is the dividend income report for April, 2022.

The monthly dividend income came out to $265.84. The yearly income total for 2022 through the end of the month was $2397.58.

The income for April, 2021 was $259.95, and the yearly income for 2021 through the end of April was $2339.11.

I sold RLI. I spent about $2500 total, and when I sold I got about $12K. I had already sold about $3K in 2019, so I was “playing with the house’s money” (as Cramer would put it).

I think I will use that money to buy a commodities fund. There are not too many that pay dividends. I made a list of the broad commodities from the ETF.com commodities channel, and find one that pays a good dividend. But as I was looking through the pages for the S&P Indices, I thought perhaps there is one for commodities that I could look at. I will look into the S&P GSCI Dynamic Roll index. The corresponding ETF is COMT, the iShares GSCI Commodity Dynamic Roll Strategy ETF. It paid quarterly up through 2018. Since then, it has only paid dividends in December. In 2019, it paid $0.857 a share. In 2020, it paid $0.096 a share. In 2021, it paid $5.494 a share.

I will also look into looking at AAM S&P 500 High Dividend Value ETF (NYSE:SPDV). It is follows the S&P 500 Dividend and Free Cash Flow Yield Index. It has not had a lot of capital appreciation, but it does pay a monthly dividend.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each April from 2011 through 2022:

Month YTD Amount 3MMA 12MMA
2022-04 $2397.58 $265.84 $774.77 $917.50
2021-04 $2339.11 $259.95 $750.24 $884.09
2020-04 $2271.57 $200.13 $753.19 $907.51
2019-04 $1855.76 $483.26 $588.35 $629.22
2018-04 $1276.89 $50.88 $405.77 $583.24
2017-04 $1814.94 $324.66 $532.02 $522.40
2016-04 $1622.67 $270.38 $461.86 $471.14
2015-04 $1441.12 $261.30 $409.21 $395.68
2014-04 $1130.58 $196.43 $323.64 $303.18
2013-04 $898.59 $179.23 $262.82 $289.40
2012-04 $1010.82 $218.56 $274.05 $271.21
2011-04 $848.29 $203.10 $216.30 $179.46

Here are the securities and the income amounts for April, 2022:

  • Vanguard Total Bond Market ETF: $140.65
  • Vanguard Total Bond Market ETF: $60.12
  • Vanguard Total International Bond ETF: $8.59
  • Global X S&P 500 Covered Call ETF: $56.48

 

Big Jim is slowly completing the picture.

Painting “The Fire at Night” by Francisco José de Goya y Lucientes, aka Goya (1746-1828); image from The Goya Foundation, assumed allowed under public domain.

 

2022-03 Dividend Income Report

Here is the dividend income report for March, 2022.

The monthly dividend income came out to $1833.54. The yearly income total for 2022 through the end of the month was $2131.74.

The income for March 2021 was $1807.93, and the yearly income for 2021 through the end of March was $2079.16.

I decided to sell Gladstone Land (LAND). The income was not growing that much, and the price was rising so high that I was not getting as many shares per quarter as I would like. I also bought more SPDR Dow Jones REIT ETF (RWR) after not having any for about almost two years. I sold during the Coronavirus crash, and I should have held on. I think I put too much emphasis on wanting my income to be less lumpy and having most of it in the “C” months and having more in the “A” and “B” months, but I think for the near future I should stick with ETFs. My income took a big jump when I went to ETFs from individual stocks.

I am also considering selling RLI. It was one of the first stocks I bought in 2010. I am not clear why I held onto it; perhaps because it is an insurance stock. They pay a dividend every quarter; they also pay a special dividend every December. The amount of the special dividend varies, and this has caused the income from RLI to fluctuate. I may use the funds to add to an ETF, or I might buy an individual stock with more consistent income.

The income for WDIV was not that great. I am not too worried for the moment. I looked at State Street’s ETF distribution history page, and it is not uncommon for WDIV to have low payouts in March.

Last month I wrote about looking into some ETFs related to gold and covered calls. I might put that off for a while. I am looking into some commodity ETFs. I am trying to see if I can hew more closely to Ron DeLegge’s framework. One issue is that most commodity ETFs do not pay dividends, and those that do only pay in December.

I might just go with ETFs for a while and let it all ride. I have a lot on my mind these days. I really really really really really hate my job and have no respect for the people I work for. I am also starting to lose respect for a lot of other people; everybody just makes jokes about how badly the project is run. I would like to get a job in something totally different, but in order to lear it well enough I would need to stop working.

I might write something up about why I think investing for dividends is better than investing for capital gains (and why buybacks are evil and only stupid people think they are a good idea). Earlier this month, I looked at the factsheet for one of the S&P Dividend Aristocrat indices, and I found this gem: Since 1926, dividends have contributed nearly a third of total equity return while capital gains have contributed two-thirds. So why focus on dividends if it is only one-third of the return? For one thing, stocks that do not pay dividends are missing out on part of the return; if a stock has had a lot of capital appreciation, why should someone else buy it from you? One problem with capital gains is you can only sell once. Another thing: the one-third from dividends is more stable that capital gains. And you don’t have to do much work figuring out which companies pay those dividends.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each March from 2011 through 2022:

Month YTD Amount 3MMA 12MMA
2022-03 $2131.74 $1833.54 $710.58 $917.01
2021-03 $2079.16 $1807.93 $693.05 $879.10
2020-03 $2071.44 $1863.26 $690.48 $931.10
2019-03 $1372.50 $1143.33 $457.50 $593.19
2018-03 $1226.01 $1099.99 $408.67 $606.06
2017-03 $1490.28 $805.35 $496.76 $517.88
2016-03 $1352.29 $732.13 $450.76 $470.38
2015-03 $1179.82 $612.48 $393.27 $390.27
2014-03 $934.15 $437.87 $311.38 $301.75
2013-03 $719.36 $360.85 $239.79 $292.68
2012-03 $792.26 $294.68 $264.09 $269.92
2011-03 $645.19 $229.43 $200.06 $163.15

Here are the securities and the income amounts for March, 2022:

  • Global X S&P 500 Covered Call ETF: $54.11
  • Vanguard Total Bond Market ETF: $130.67
  • Vanguard Total International Bond ETF: $7.82
  • RLI Corp: $26.91
  • SPDR S&P Dividend ETF: $839.47
  • SPDR Dow Jones REIT ETF: $75.65
  • SPDR S&P Global Dividend ETF: $411.99
  • Vanguard Utilities ETF: $230.25
  • Global X S&P 500 Covered Call ETF: $56.67

 

Big Jim’s plan is to stick to the plan.

Image of Ladder of the Divine Ascent, a 12th century icon at Saint Catherine’s Monastery, image assumed allowed under public domain.

2022-02 Dividend Income Report

SDY Four-quarter Moving Average

Here is the dividend income report for February, 2022.

The monthly dividend income came out to $224.92. The yearly income total for 2022 through the end of the month was $298.20.

The income for February 2021 was $182.83, and the yearly income for 2021 through the end of February was $271.23.

Over the past few months I have mentioned that I am thinking about buying some shares in individual stocks again. I had to move hosts and go through some posts to update the image links, and I re-read some posts about individual stocks vs ETFs. The reasons I went to ETFs was that it was less work to keep track of in general, companies can make things more complex by doing mergers or spin-offs, and they will sometimes try to buy out shareholders with less than 100 shares at less-than-market prices. The advantages of individual stocks was that generally the income increased every quarter, while for ETFs (even ETFs based on DGI indexes) the income is variable.

I downloaded the dividend history for SPDR S&P Dividend ETF (SDY) from December of 2005 to 2020, and plotted the four-quarter moving average. It started at $0.30 in 2005, peaked at $0.50 in 2009, went down to $0.40 in 2010, and had some ups and downs until getting to about $0.83 in 2021. Not as much of a straight line as it is for, say, VZ, but still growth.

BND Four-quarter Moving Average

I also did the same for Vanguard Total Bond Market ETF (BND) for as long as I have had it (State Street gives the full distribution history for its funds; as far as I can tell, the supposedly investor-friendly Vanguard only gives about a year and a half). It went up from about $0.15 to about $0.20, and then gradually down to $0.14 again. I have more shares, but I am getting less income.

I am also considering another covered call exchange-traded product. I may not actually get any of these for a while since this involves a LOT of reading.

For some background: I just listened to an episode of the Index Investing Show from 2020 where he talked about why holding GLD (SPDR Gold Shares) is better than buying bullion. You do not have to deal with storage, insurance or commission fees. He also mentioned you can generate income by selling covered calls on GLD.

One issue w/covered call strategy outside of ETFs/ETNs and using the product yourself is that your shares can get called away. Ron DeLegge said this has happened with his ETF Guide Premium Covered Call portfolio strategy. I guess that’s a fact of life, and it is not the end of the world. But then in order to continue, you have to go out and buy more shares in the underlying securities (presumable at a higher price than when you originally bought them). I think using ETFs that execute covered call strategies removes this potential burden.

I am looking at an ETF (exchange traded fund) and an ETN (exchange traded note) that sell covered calls on GLD.

An interesting fact about GLD: as far as I know, it is the only ETF with its own website. It also has a page on the State Street Site.

The ETF is the FT Cboe Vest Gold Strategy Target Income ETF (IGLD), offered by a company called First Trust. According to the summary prospectus, a lot of the work is done by a sub-advisor called Cboe Vest.

The ETN is the X-Links Gold Shares Covered Call ETN (GLDI) by Credit Suisse. It follows the Gold FLOWS 103 Index, which I think Credit Suisse made up. If the company running the fund also made the index, is the ETN really passive?

I have to read more through all the docs, but I think the general state is: GLD holds gold bullion in vaults, GLDI holds GLD and sells covered calls with a strike price 3% above the then-current price, and IGLD holds treasury bonds and sells different types of options on GLD without holding GLD itself.

GLDI is an ETN, and I need to look into how ETNs are different than ETFs (start with articles here and here). I think the basic differences are that ETNs have better tax treatment, and they are notes and depend more on the solvency and financial health of the issuer, which ETFs are all legally separate vehicles; in other words, there are different ways you can lose money. I don’t think Credit Suisse is going bust anytime soon. I have never heard of First Trust until now. Since I will do this in an IRA account, I don’t think that the tax differences will matter.

I will have to read the documents for the ETFs and the ETN before making a decision. I should probably go through GLD first, then IGLD, then GLDI. The methodology for the Credit Suisse Nasdaq Gold FLOWS 103 Index is 22 pages. The prosectus for GLD is 36 pages, which up until I had opened it was the longest prospectus I had seen for a single fund (some fund families will have prospectuses for multiple funds in one document). The prospectus for GLDI is 189 pages. That is longer than some annual reports. Usually they are a lot of verbiage explaining that you are on your own and listing all the theoretically possible ways your money could go up in smoke. But this is by far the longest one I have seen.

I also plan on going through a list of commodity ETFs from ETF.com. Perhaps one of them pays a consistent dividend, and I can be closer to the ideal put forth by Ron DeLegge. He has said a lot of people are missing commodities. I do not want to invest in anything without a decent cash flow, and most commodity ETFs have no cash flow. There are a few that do covered call strategies, but not for too many commodities. There are a couple for GLD, and Credit Suisse has one for silver and one for crude oil. The price on the oil ETN took a dive, as did the distribution (which are called “coupons” for ETNs): from $3.68 in 2019 to $1.06 in 2021. I have not been able to find any covered call ETFs for anything agricultural or the overall commodity sector.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each February from 2012 through 2022:

Month YTD Amount 3MMA 12MMA
2022-02 $298.20 $224.92 $1235.58 $914.87
2021-02 $271.23 $182.83 $1253.94 $883.71
2020-02 $208.18 $196.17 $1259.50 $871.11
2019-02 $229.17 $138.45 $847.72 $589.58
2018-02 $126.02 $66.43 $654.60 $581.51
2017-02 $684.93 $466.05 $570.90 $511.78
2016-02 $620.16 $383.08 $524.89 $460.41
2015-02 $567.34 $353.85 $492.40 $375.72
2014-02 $496.28 $336.61 $363.62 $295.33
2013-02 $358.51 $248.39 $348.20 $287.16
2012-02 $497.58 $308.90 $337.51 $264.48

 

Here are the securities and the income amounts for February, 2022:

  • Global X S&P 500 Covered Call ETF: $53.26
  • Vanguard Total Bond Market ETF: $137.97
  • Vanguard Total International Bond ETF: $10.62
  • Gladstone Land: $23.07

Big Jim likes investments that do the work for him.

Some terms in this post are trademarks of Credit Suisse, First Trust, State Street Global Adivisors, and possibly other entities.

2022-01 Dividend Income Report

Here is the dividend income report for January, 2022.

The monthly dividend income came out to $73.28. The yearly income total for 2022 through the end of the month was $73.28.

The income for January 2021 was $88.40, and the yearly income for 2021 through the end of January was $88.40.

So far there is not much to tell. I am getting back into listening to some conference calls and taking notes in Org Mode. I plan on buying a REIT that pays monthly in the next few weeks.

When I first went to ETFs, there was not much income in January since bond funds do two payouts in December. That is starting to change for me with LAND and XYLD.

I tend to let podcasts pile up, and sometimes have years of archives to go through when I change podcasts. Now I am listening to The Index Investing Show with Ron DeLegge. I am now in April of 2020. It looks like he ended the podcast. I have not listened to the last episode in full, so I do not know if he will continue it elsewhere. He has another site: ETF Guide, and a YouTube channel. I did briefly listen to the beginning of the last episode, and he hinted that the Index Investing Show might continue on YouTube, but so far I only see the ETF Guide channel, and that channel does not have a video about the Index Investing Show.

In one of the episodes I listened to, he mentioned that everyone should have a written investment policy statement. I said a few years ago I would write one, and so far I have not. I added it in my ever-growing to-do list in my Org file.

One of his videos on the ETF Guide channel was an ETF battle: It was JEPI (JPMorgan Equity Premium Income ETF) vs SCHD (Schwab US Dividend Equity ETF) vs XYLD (Global X S&P 500 Covered Call ETF). SCHD won the battle due to cost and performance. I don’t think SCHD fits with the other two. It is just a standard stock ETF focusing on dividend stocks. The other two invest in large-caps stocks and sell options. JEPI has lower cost, but it is JP Morgan, and frankly I do not want to give those bungholes any more of my money. I think the reason JEPI has lower costs is because it has more assets and JP Morgan is a bigger company. Also it is actively managed, and I prefer index funds. XYLD uses the CBOE S&P 500 BuyWrite Index, which I grant is pretty obscure (methodology here).

On the Index Investing Show, Ron DeLegge often talks about the ETF Guide Premium newsletter. They have monthly income trades. They sell covered calls on 2 ETFs: SPDR S&P 500 (SPY) and SPDR Gold Shares (GLD). Sometimes they have a third. I got a free sample of the newsletter, and I think that XYLD can yield the same amount with less effort.

When I was living in Chicago, I knew a lot of people who worked in trading. One guy was thinking about applying for a job at one of the exchanges, and he got some pamphlets explaining derivatives. One of them said something to the effect of, “If this all sounds like legalized gambling, that is because it is.”

As I understand the covered call strategy, you are placing a bet that the stock will stay below a certain price (known as the “strike price”). You are selling an option, or “writing a call”. The other party pays you a premium to buy the option. If the stock prices is above the strike price at the expiration date, the buyer of the option can compel the seller of the option to give the buyer their stock. (Someone told me the difference between options and futures is that futures must be exercised, while options do not, which is why options are called “options”.) If the stock is below the strike price at the expiration date, nothing changed hands and the buyer keeps the premium. Many parties buy options as a form of insurance, and most expire worthless, allowing the seller of the option to keep the premium. Per the index methodology doc, the index writes 2% out-of-the-money call options expiring in the next month.

So far XYLD is working out well for me. Like all the other ETFs, the dividend amount is inconsistent.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each January from 2012 through 2022:

Month YTD Amount 3MMA 12MMA
2022-01 $73.28 $73.28 $1215.96 $911.36
2021-01 $88.40 $88.40 $1258.54 $884.83
2020-01 $12.01 $12.01 $1236.27 $866.30
2019-01 $90.72 $90.72 $818.52 $583.57
2018-01 $59.59 $59.59 $819.32 $614.81
2017-01 $218.88 $218.88 $584.54 $504.86
2016-01 $237.08 $237.08 $550.81 $457.97
2015-01 $213.49 $213.49 $471.54 $374.28
2014-01 $159.67 $159.67 $335.67 $287.98
2013-01 $110.12 $110.12 $348.07 $292.20
2012-01 $188.68 $188.68 $316.66 $256.77

 

Here are the securities and the income amounts for January, 2022:

  • Global X S&P 500 Covered Call ETF: $50.25
  • Gladstone Land: $23.03

Big Jim’s year is starting out pretty well.

Painting of Last Judgement in the Arena Chapel in Padua by Giotto di Bondone (1267 – 1337); assumed allowed under public domain.