Everyday Freethought

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.

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:

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.

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:

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.

Here is the dividend income report for December, 2021.

The monthly dividend income came out to $3408.55. The yearly income total for 2021 through the end of the month was $10951.48.

The income for December 2020 was $3490.60, and the yearly income for 2020 through the end of December was $10541.51.

I had a big jump in my yearly income in 2019 over 2018 after I switched from individual stocks to ETFs. It was about 30%. I know that jumps that big will not happen too often, but since then it seems like my income is stagnant. Granted, a lot of companies were hit by COVID in 2020, but still it seems like things have stalled out. Perhaps as the world gets used to COVID the increases will continue. I hope there are some bigger increases soon. I only have about 10 years to set myself up for the next 10 years after that (or 20 or 30).

I am realizing you need a lot of assets to have a decent cash flow. I read a blog post using Warren Buffett’s stake in Coca-Cola to show how great DGI is. The kicker is that he has 400 million shares. I can’t afford 400 million shares of anything decent. Maybe I need to get an account on a DGI forum and connect with other people at my level. My 100 shares of RLI giving me $8/month will not keep my out of the poorhouse.

I am thinking of putting some more money into individual stocks again. I know I stopped because it was a lot of work keeping track of all of those stocks (I use both GnuCash and a spreadsheet to track all of this), but I really really really like some securities with income that only increases (barring dividend cuts). Again, maybe this is obvious to everyone like me, but I am not clear why some dividend ETFs do not have consistently rising income. I can see why for WDIV, since foreign companies do not pay consistent amounts from quarter to quarter. But since American companies do pay more consistent amounts, I do not understand why SDY is so variable. I get that some companies get dropped from the index, but I think that happens once a year. Perhaps it is because people can buy and sell ETFs anytime. But still, while individual stocks are more work, I would like a some more predictability in my income, especially since the point of all of this is to have income in the future when I am no longer working.

I would also like to buy some that pay in the “A” or “B” months, since the “C” month is already the biggest month. A lot of companies and just about all ETFs pay in “C” months. That being said, I have the fact that sometimes Vanguard ETFs miss the “C” month and pay in the next “A” month.

I am considering getting an account with Morningstar or Yahoo Finance to look at individual stocks. Or figure out how to calculate payout ratios myself. I know there are a lot of DGI bloggers who start paid newsletters analyzing stocks. I find that a depressing trend. Isn’t DGI enough? There are about 4700 stocks traded on the NYSE and the NASDAQ. There are about 700 in the Dividend Champions spreadsheet. You have already eliminated 85% of the stocks on the market with DGI. How many newsletters do you need to do DGI? How much guidance does a DGI investor need? Perhaps joining one of the free forums is all you need to do.

One thing I have wondered is if there is a term for companies that have increased their dividend for less than 5 years. If we are going to stick with words that start with “C”, perhaps “Dividend Children”. Granted, companies that have 50+ years are “Kings”, so perhaps “Trainees” is a good word. Or if we want to stick with the “K” sound, “Qualifiers”.

I plan on buying some shares in REITs that pay monthly: O, STAG, or both. Then I will look at other stocks.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each December from 2011 through 2021:

Here are the 2020 and 2021 amounts for the securities that I own, with the difference. There might be a couple of arithmetic errors, but I think it is pretty accurate. It shows that the big culprits for the lackluster growth are the bond funds and WDIV:

Here is a table of the number of Dividend Champions, Contenders, Challengers, and a total of all three for each January from 2011 to 2022. I think there are a few errors in the 2022 table; I will contact the people who made it (they list DTE which cut its dividend, and removed ETN, which did not; the 2021-12 table was correct for those companies, and there might be a few other issues with their first 2022 table). This table is also on this site on the main dividends page.

Here are the securities and the income amounts for December, 2021 (in December, some securities have multiple payouts):

• Global X S&P 500 Covered Call ETF: $39.74
• Vanguard Total Bond Market ETF: $135.69
• Vanguard Total International Bond ETF: $7.45
• RLI Corp: $211.09
• RLI Corp: $26.39
• Vanguard Utilities ETF: $240.27
• SPDR S&P Dividend ETF: $1044.31
• SPDR S&P Global Dividend ETF: $1051.93
• Vanguard Total Bond Market ETF: $141.88
• Vanguard Total Bond Market ETF: $130.95
• Vanguard Total International Bond ETF: $275.29
• Vanguard Total International Bond ETF: $1.30
• Vanguard Total International Bond ETF: $79.31
• Gladstone Land: $22.95

Big Jim knows that the commandment that your second derivative must always go up will be the death of us all.

Painting by Alberto Sotio, 12th-century Italian painter; image from Wikimedia, assumed allowed under public domain.

Here is the dividend income report for November, 2021.

The monthly dividend income came out to $166.06. The yearly income total for 2021 through the end of the month was $7542.93.

The income for November 2020 was $196.63, and the yearly income for 2020 through the end of November was $7050.91.

I have not started using Org Mode to take notes on conference calls. I am still going through all of the notes I have collected on various topics throughout the years. Some of them will show up as insightful and profound posts on this blog. If any of the fit ladies out there are sapiosexuals, this blog is your one-stop shop for everything you need.

The interest income is still declining, but I think it may have bottomed out. I still think a big factor in the inflation we are seeing is trade routes being disrupted: People started buying more stuff from China, so transit across the Pacific is more profitable than other routes. A lot of people think it is all “money printing”. There was a lot of “money printing” after the Great Financial Crisis. While it impacted asset prices (and things Paul Singer can afford that I cannot), I do not recall prices at the grocery store going up. I am not saying money printing has no effect, but the people saying so this time sound like (and in many cases are) the same people who priedicted disaster the last time. If all these bozos who think the Federal Reserve and the federal government are the source of all the world’s problems, perhaps they can explain why big chunks of the private sector cannot figure out a way to make money other than playing financial games (like stock buybacks). If you think the private sector is the solution to every problem, then stop blaming everything on the government.

As a commenter on Hacker News put it in 2016: “Indeed – as Krugman keeps going on about, there’s little risk of ‘classical’ inflation. What there is is a lot of complaining from the rentier class (and some of the better off pensioners) that they can’t make 4% for doing nothing any more.”

At least this time nobody is comparing the USA to Weimar Germany or Zimbabwe. Which is ironic, because this time inflation is worse than it was a decade ago. So maybe some of these conservative bozos are slowly learning something. I think if the shipping industry can get things sorted out, things will get better (although I am sure that there is probably some manipulation going on as well). One of the things I have noticed while cleaning my notes up in my migration to Org is that I have a lot of sites flagged as potential economic indicators and a lot that are news sites about specific industries. I will be on the lookout for some about the shipping industry.

I think the Fed should raise interest rates. It would lower stock prices and PE ratios (which is good for a dividend investor), force companies to figure out how to make money in their nominal industries, kill companies that should not be living, and probably kill a lot of cryptocurrencies.

I really really really really really hate my job and I am thinking about quitting and learning technology that interests me. I have some money saved up. I don’t know how bad inflation will get, but I should have enough for about a year and a half, maybe two and a half. If I leave, my 301K can be moved to my Roth IRA, and I will start getting a lot more money each month. Maybe I already do have enough to retire.

Here is a table with the year-to-date amounts, the monthly amounts, and the three- and twelve-month moving averages for each November from 2011 through 2021:

Here are the securities and the income amounts for November, 2021:

• Vanguard Total Bond Market ETF: $134.58
• Vanguard Total International Bond ETF: $8.57
• Gladstone Land: $22.91

Big Jim has many thoughts, and they are very deep.

Painting by the Master of San Martino, made between 1270 and 1290, hanging in National Museum of San Matteo, Pisa, image from Wikimedia, assumed allowed under Public Domain.

Here is the dividend income report for September, 2021.

The monthly dividend income came out to $1842.58. The yearly income total for 2021 through the end of the month was $6911.62.

The income for September 2020 was $1836.64, and the yearly income for 2020 through the end of September was $6659.02.

I have seen inflation at the grocery store. I can’t say I have seen inflation at the gas pump since I do not drive as much as I used to, and aside from food and gas I don’t buy much. I am reluctant to say that there is persistent inflation, at least not until Paul Krugman says so. I am seeing a lot of articles online saying there is a lot of inflation, and how everyone at the Fed is an idiot. To me, this feels a lot like the Great Recession and its aftermath: A lot of people insisted hyperinflation was around the corner, and at the end of the day the only proof was the intensity of their convictions. The sense of superiority people get from Pessimism Porn is a helluva drug.

There has to be a neologism based on Schadenfreude for this sense of superiority people feel for a disaster that never happens.

It seems like people expect the Fed and government statisticians to be perfect all the time, and if anything the Fed says doesn’t match up with their personal situation, then they just write off the Fed. The Federal Reserve (and economists in general) are trying to understand pretty much the whole world. If your experience doesn’t line up, then maybe you are the oddball.

Krugman recently blogged about this in a post titled Wonking Out: Who knew used cars and shipping containers would matter so much?

I used to describe national income accounting — G.D.P. and all that — as a peculiarly boring form of science fiction. That’s not to say that the statisticians just make things up; they try really hard, and their work is immensely valuable. It’s just that any close look at how the numbers are constructed reveals that data coverage is always incomplete and the gaps are filled in with estimates and imputations.

President of the Federal Reserve Bank of St. Louis James B. Bullard has said that the FOMC takes headline inflation into account. I will put reading some of the Fed’s reports on my ever-expanding to-do list. It’s like “Thanks Obama” has been replaced with “Thanks Fed”.

The Billion Prices Project has shown over the past decade that inflation is pretty much what the Fed said it was, even during the last hyperinflation scare. So score one for the Feds.

We have had asset inflation for a while: real estate, stock prices, etc, as Paul Singer reminded us. He was widely and deservedly mocked for this call, since a lot of prices did not rise just because billionaires are paying more for their toys. I think this time there is going to be some consumer inflation, but the cause is supply chain disruptions. I don’t think it has as much, if anything, to do with the money supply. A lot of businesses were closed, and people suddenly shifted what they were spending their money on. This changed shipping patterns: more electronics out of Asia, less grain out of the Midwest.

Maybe the reason the Fed is reluctant to say there is a more inflation because a lot of it is due to imbalances in shipping. And shipping is done by the private sector. All you Fed-haters remember the private sector, don’t you? The guys who can take care of imbalances on their own, right? Maybe the Fed is assuming that the private sector will live up to its reputation and get the empty containers to the exporters. I don’t know if that will affect the chip shortage; perhaps part of the chip shortage is due to a container shortage for chip parts (such as the metals for the chips). Unless the industry is being really stupid and making more containers and just making the pile of empty containers a LOT bigger. If that is happening, then we could be hurting for a while. I know that shipping empty containers is probably very expensive, but I have also read that the rates for some routes has more than doubled. It seems like there is a tipping point where moving empty containers is worth it.

It is interesting to me that people who think it’s naive to believe everything you hear also think it is wisdom to dismiss everything you hear. I think both positions are more alike than different.

I also plan on getting back to learning about Org Mode, and getting back to listening and taking notes on the conference calls for the REITs that I already own and am thinking about getting into.

I also plan on getting back into a few stocks in addition to the REITs. I know I got out of individual stocks because I got tired of entering information into a spreadsheet and GnuCash but unlike income from DGI ETFs, income from DGI stocks tends to go steadily upward. I am considering looking at a couple of bank stocks that pay in “A” months: Busey Bank and Bank OZK. I used to have an account at Busy Bank when I was at Moo of I.

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 2021:

Here are the securities and the income amounts for September, 2021:

• Vanguard Total Bond Market ETF: $135.17
• Vanguard Total International Bond ETF: $8.80
• RLI Corp: $26.32
• SPDR S&P Dividend ETF: $908.16
• SPDR S&P Global Dividend ETF: $701.60
• Global X S&P 500 Covered Call ETF: $39.76
• Gladstone Land: $22.77

Big Jim is getting back into his routine.

Painting of the Massacre of the Innocents by Guido of Siena (13th Century), assumed allowed under Public Domain.

Here is the dividend income report for August, 2021.

The monthly dividend income came out to $207.39. The yearly income total for 2021 through the end of the month was $5069.04.

The income for August 2020 was $205.28, and the yearly income for 2020 through the end of August was $4822.38.

I have not had a lot of time to blog. I know I said last month I would have more this month, but I was busy again. Perhaps in the report for September I will go into my views on what is going on and what my plans are.

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 2021:

Here are the securities and the income amounts for August, 2021:

• Vanguard Total Bond Market ETF: $136.02
• Vanguard Total International Bond ETF: $8.88
• Gladstone Land: $22.73
• Global X S&P 500 Covered Call ETF: $39.76

Big Jim was surprised to find out that although El Greco painted a lot of religious subjects (some multiple times), El Greco never painted the Transfiguration.

“The Annunciation”, El Greco (1541 – 7 April 1614), in the Museo del Prado, assumed allowed under Fair Use.

Here is the dividend income report for July, 2021.

The monthly dividend income came out to $199.25. The yearly income total for 2021 through the end of the month was $4861.65.

The income for July 2020 was $209.33, and the yearly income for 2020 through the end of July was $4617.10.

I have not had a lot of time to blog, so since I am posting this on the last day of the month, I will put any notes/thoughts/commentary in the dividend income report for August, 2021.

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 2021:

Here are the securities and the income amounts for July, 2021:

• Vanguard Total Bond Market ETF: $131.83
• Vanguard Total International Bond ETF: $9.09
• Global X S&P 500 Covered Call ETF: $35.65
• Gladstone Land: $22.68

Big Jim was busy this month.

The Annunciation by Nicolas Poussin (1594 – 1665); image from Wikipedia, assumed allowed under Fair Use.