Latest Stock Buy 11 shares of BAC $23.835

Updated: 8 July, 2020 seen 35

On May 26, 2020, I bought an additional 11 shares of Bank of America (BAC) paying $23.835 per share. 

With its quarterly dividend payout of $0.18 per share, this latest buy has a dividend yield of 3.02% and will pay us $1.98 (before tax) every quarter.

The sum might sound small (and it is very small) - but I bought this stock because of other reasons - I plan to increase the total share count to 100 in a reasonable time frame (say one year) and once we have 100 shares start selling covered calls on it. Here I wrote an article for - Covered Call Trade Idea - Generate $100/mo from this Stock

BAC has been raising its dividend for the last 6 years, the current payout ratio is 47.65%

By now BAC stock takes 3.11% from our US stock portfolio.

This is already the second time this year when we are buying BAC stock, last time we bought 10 shares at the start of May 2020

Average cost basis per share: $23.15

Just like with our first buy, I bought this stock on margin, and as a penalty. Penalty for a bad trade, let me explain - A couple of days ago I placed a very speculative trade with HTZ, looking for a quick profit of more than 30% in 11 days, see: Covered Call on HTZ - Potential income return 32.49% in 11 days, but instead of quick profit company announced Chapter 11 filling for bankruptcy and we were risking to lose about $250 in this trade, see: Hertz (HTZ) Filling for Bankruptcy / Chapter 11 - Our potential Max loss $247. Penalty trade is a motivation to avoid bad trades and buy bits by bits a decent stock to sell covered calls in the future. For now - BAC is my penalty trade. 

Closed HTZ Covered Call with a -$200 Loss

For the rest of the year, we are looking to take $3.36 (after tax) from this buy, which is about 0.09233% from our $3,600 goal for 2020

2019 in Review and Financial Goals for 2020. 

We now hold 21 shares of BAC, In total that contribute about $12.85 (after tax) yearly to our dividend income portfolio.

The Bottom Line

79 shares to go once we will be able to start selling covered calls and generate extra income. 

If we had 100 shares today and with today's price and our average cost per share $23.15, we could sell June 26, 2020, covered call (monthly options) with a strike price $24.50, to get $0.84 premium.