On February 13, 2020, I bought (got assigned) 8 shares of Pfizer (PFE) paying $39.5 per share. With its quarterly dividend payout of 0.38 dollars per share, this latest buy has a dividend yield of 3.84% (before tax) and will pay us an additional $3.04 (before tax) every quarter. Not the biggest dividend, but every bit counts!
I bought these shares after I let expire in the money a put option I wrote back on January 21. (Sell 1 put PFE 39.5 Feb 14, 2020 @0.57). As PFE stock fell bellow my strike price I got assigned 100 shares, I had plenty of time to roll up or roll forward this trade, but as I have an intention to acquire PFE stock once in a month. I just let in expire in the money and took 100 shares. Now, as I was buying on margin, and sold immediately 92 shares, keeping just 8.
Using dollar-cost averaging our average cost per one PFE share is $40.02
I bought the PFE stock for my partner. Just like in the case with our child portfolio I will keep this stock under my account. I like to call this buy a buy for Partnership Fund. There are no special goals set for it (yet) - but if, then it might be to reach $50,000 by the end of this decade (2029). Now the fund consists of 15 PFE shares worth about $561.
There are three simple reasons I like this stock - it has a reasonably high dividend yield of more than 3%, it has increased the dividend payout for the past 9 consecutive years. Last, but not least, on PFE we can trade both put and call options. PFE has dividend payments in March, June, September, and December. We will get a small boost in these months.
Actually selling options is the main reason for acquiring PFE
My original plan was to start writing naked puts on PFE and from the money received to buy actual shares. But It didn't work out as I was expecting as I faced liquidity issues and couldn't sell a naked put on PFE. I was able to buy some shares though using buying power. Anyhow I will solve the liquidity problem and in the future, I will write puts to collect premium upfront and to reinvest money in additional PFE shares.
I will keep buying once in a month PFE until it reaches 100 shares, to make it more interesting as I bought 7 shares on January, 8 in February, I will buy 9 on March, 10 in April until in December we will have 100 shares. Also, I will sell near the money puts to collect the premium and lower cost basis.
By now PFE takes 2.5% from our US stock portfolio, that's one of the smallest (but not the smallest) position in the portfolio by now. I don't believe it will stay so for long, as I'm looking to grow PFE share count to 100 by the end of 2020
For the rest of the year, we are looking to take $7.75 (after tax) from this buy, which is about 0.21% from our $3,600 goal for 2020. Not the biggest addition to the portfolio, but every bit counts.
In total PFE now contributes about $19.38 (after tax) yearly to the dividend income portfolio.
2019 in Review and Financial Goals for 2020
About Pfizer
Pfizer Inc.is an American multinational pharmaceutical corporation headquartered in New York City. It is one of the world's largest pharmaceutical companies. It is listed on the New York Stock Exchange, and its shares have been a component of the Dow Jones Industrial Average since 2004. Pfizer ranked No. 57 on the 2018 Fortune 500 list of the largest United States corporations by total revenue
85 shares to go for the rest of 2020. It feels awesome having such Partnership Fund Incorporated. I have not a single clue where it will grow, but I'm damn glad I have started it, maybe after a while, my partner will join the fund with her own funds, who knows.
Speaking of PFE and option selling, I have this feeling that we will take at least 20% income from options + dividends this year.
