Boost your Microsoft dividend

Recently I notified you that Microsoft (MSFT) had just broken out its 10 year trading range. As I said many times, MSFT is one of the safest stocks in the world you can hold forever. Believe or not, MSFT is one of the only 3 companies in the world with the highest bond rating of AAA (the other 2 are J&J and Exxon Mobile).  And with dividend reinvestment you can become very rich over time. If you have bought MSFT shares, now you can even boost your dividend income since its ex-dividend date is just around the corner. MSFT will pay $0.28 per share for those who hold its shares on May 13 (even if you just hold it one day and sell the next day). I have talked about trading on the great dividend stocks' ex-dividend date before and you may check here my previous blog regarding trading on the Novartis ex-dividend date.

Let's say you have 100 shares of MSFT, for which you will collect $28 for your position and hopefully you will reinvest this $28 automatically when you get it. Now if you buy another 100 shares at the current price around $40 and sell 1 contract of its May 17 $40 call option right away. You will be paid first by $1.1/share (or $110 total).  Two things may happen:

• if MSFT is above $40 when the call option expire on May 17, your MSFT shares will be called away (i.e. some one will buy your 100 shares at the price $40). In this scenario, you will keep $110 clean plus the $28 dividend. This is approximately a 3.5% income for your 100 shares of MSFT in just a few weeks.
• If MSFT is below $40 on May 17, you will still keep your 100 shares for MSFT plus you also get $110+$28 for the trade. You can then sell another round of call options to collect more money from it.

This sounds very little money but over time it will accumulate quickly to become big money. Of course, if you trade with a bit more money, say for 500 shares, then the short-term income is 5 times $138 =$690. Don't forget, if you can do this quarterly, your annual return rate will be close to 15%. Not bad at all with this very safe money-making technique. I'm routinely doing this now to boost my retirement portfolio.