Sometimes being a Dividend Growth Investor is the hardest job in town. That's because DGIs spend most of their time researching companies to find those unique companies that consistently increase their revenues, earnings and dividends over an extended period of time only to buy them at the wrong time and they go down in price. That's what has happened to a lot of dividend growth companies over the last year or so. And while it's always nice to see my dividends increasing each year, it's also disheartening to see the overall value of my portfolio dropping.
In some cases even reinvesting the dividends back into the stock can't keep the value of my accounts from falling. That's where selling options come into my strategies. Selling options can be a great way to increase the amount of money coming into my accounts on a monthly or weekly basis. And just like dividends, I use the option income to buy additional stock.
But I'm always looking for ways to augment the dividend and option income. One additional tactic I use is leveraged directional ETFs. They're a very special brand of ETFs. My favorites are the 3X ETFs. Like all other ETFs, there are many leveraged ETFs that cover just about any segment of the investing universe. I primarily use just four ETFs, although I'll use any ETF that fit my needs. The four I use most are the SPXL, SPXS, UDOW and SDOW. These mimic the SPX and the DOW while moving three times faster than the averages, and therein lies the benefits of leverage.
There's not much fundamental analysis going on when you use these derivatives. They're really only understood by investors who understand technical analysis. They're also not long term investments. I've found them to be most successful when used for a period of one week or less, but I imagine they could be successfully used for longer periods. For me they're pretty lucrative but I would have never tried them if I hadn't already had a good foundation in options trading and technical analysis.
During tough periods like we've seen recently in the markets where stock prices continue to deteriorate from the inside out, it's nice to be able to generate income simply by identifying the direction of the overall market. By buying and selling leveraged ETFs I generate funds to buy additional solid dividend growing companies. And if my timing's not exactly perfect when I'm buying those individual companies, I can at least sleep better at night knowing that my overall portfolio is growing. Despite the economy.
In some cases even reinvesting the dividends back into the stock can't keep the value of my accounts from falling. That's where selling options come into my strategies. Selling options can be a great way to increase the amount of money coming into my accounts on a monthly or weekly basis. And just like dividends, I use the option income to buy additional stock.
But I'm always looking for ways to augment the dividend and option income. One additional tactic I use is leveraged directional ETFs. They're a very special brand of ETFs. My favorites are the 3X ETFs. Like all other ETFs, there are many leveraged ETFs that cover just about any segment of the investing universe. I primarily use just four ETFs, although I'll use any ETF that fit my needs. The four I use most are the SPXL, SPXS, UDOW and SDOW. These mimic the SPX and the DOW while moving three times faster than the averages, and therein lies the benefits of leverage.
There's not much fundamental analysis going on when you use these derivatives. They're really only understood by investors who understand technical analysis. They're also not long term investments. I've found them to be most successful when used for a period of one week or less, but I imagine they could be successfully used for longer periods. For me they're pretty lucrative but I would have never tried them if I hadn't already had a good foundation in options trading and technical analysis.
During tough periods like we've seen recently in the markets where stock prices continue to deteriorate from the inside out, it's nice to be able to generate income simply by identifying the direction of the overall market. By buying and selling leveraged ETFs I generate funds to buy additional solid dividend growing companies. And if my timing's not exactly perfect when I'm buying those individual companies, I can at least sleep better at night knowing that my overall portfolio is growing. Despite the economy.
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