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One of the downsides of having portfolios constructed mostly of dividend payers is basically everything is automated. I don’t have to track positions every day to see how they are doing; wondering if I have to sell, what to buy or what position to switch to. It all just works on its own. I don’t have to watch my portfolio every single day - because I know my positions are working for me - providing dividends monthly or quarterly.
(Source)
Therein lies the issue too. A rock-solid dividend payer like AbbVie (ABBV) that I’ve been writing calls on means I’m not necessarily watching the position every day. Though I really probably should have been considering I know I’m wanting to write calls against the position again to either lower the cost basis of the shares again or get the position called away - then use that cash to write puts again to repeat the cycle all over.
So, what am I talking bout? Yesterday ABBV jumped to over $107 per share. To roughly $107.50 at the peak midday. It seems like a successful late-stage study announcement helped provide some optimism for shares of the company. Anything to help break its dependence on Humira is a win.
(Source - Google Finance)
Now we can see that shares are down - though they did initially open higher. Had I been paying attention yesterday we could have easily written covered calls against the position to collect some attractive premium. Today with the falling share price, and when I’m finally noticing, we aren’t in the same position. Still could write some calls but not nearly as generous as we could have yesterday. I’ll hold off for now.
The overall market is taking a bit of a hit today as tech selling is extending its decline. This seems to be the only news really affecting ABBV so nothing specific.
I wanted to update you that I dropped the ball here. We could have been collecting even more premium from this ABBV position (thus lowering our cost basis again.) Except, due to my lack of having to check my portfolio and positions every day as a mostly passive long-term oriented dividend income investor, I missed out. There is always tomorrow! And perhaps a good time to finally utilize Fidelity’s price alert tool.
(Source - Fidelity)
Disclosure: Long ABBV
This is not investment advice but for entertainment purposes only. Any decision to buy or sell is solely made by that individual. Speak with a financial professional to develop an investing plan that is right for your own objectives and goals.
Downside Of A Passive Dividend Portfolio
Nick you do describe one of the frustrations of a DGI portfolio. Another is that when one has been constructed and you’re not reinvesting due to rising prices there’s just not much to do. Idle hands being the devil’s workshop etc. Thanks