Medical Property Trust (MPW) Update
Hi Main St beats Wall St readers,
As a recap, I own shares of MPW in my non-margin account and I own shares in my margin account. My margin account holds 1000 shares. With these shares I sell Covered Calls to collect the premium. With the premium I buy more shares and transfer them into my non-margin account. As a result my non-margin account continues to grow shares while I maintain my margin account with the 1000 shares for trading.
All shares I receive as a dividend I keep in my non-margin account. The dividend shares I receive in my non-margin account stay there and the dividend shares I receive on the shares in my margin account I transfer into my non-margin account.
I do this because at heart I am an options trader and I like to trade options on stock in a margin account. I can do Covered Calls in my non-margin account but I don’t. These shares I will hold long term. I don’t want to take a chance of losing these shares to assignment. In my margin account I trade options. If I lose the shares to assignment I buy them back and continue trading options against the shares. It is safe to say my non-margin account is for long term holding and my margin account is for trading which comes with a little more risk.
This week, with my 1000 shares in my margin account, I sold a 10 contract Covered Call. This Call will expire next Friday, June 2nd. I sold 10 MPW 6/2/23 $8.50 Calls for a premium of 9¢. This gave me a $90 premium for the 10 contracts (1000 shares). With this $90 I bought 11 shares of MPW at $8.03. These 11 shares I put into my non-margin account.
5/23/23 – Sell to Open 10 MPW 6/2/23 $8.50 C @ 9¢ (+$90)
If you look at my Active Trades/Current Positions page and scroll down to Dividend Stocks you can see how I added shares to my MPW position with premiums from selling Calls and dividend shares received. In my non-margin account I now hold 1563.29 shares. I still have the 1000 shares in my margin account giving me a total of 2563.29 shares.
Most of you know I am in this stock long term. I do not plan on selling any shares. However, there is a concern of a dividend reduction. Right now the dividend is 29¢ quarterly. This means I get 29¢ per share every 3 months. The next dividend has already been approved and it will be paid on July 13th. With my 2563 shares I will receive $743 which will buy me in the area of 90 shares. According to what the price of the stock is on July 13th.
There is talk amongst professionals that there could be a dividend cut. Who knows if that will happen but if it does I think it will be a 25% cut. That would still leave me with a dividend in the area of 20¢. It would still be a great return. Only time will tell. They do have a great record of not reducing their dividend, but today the stock market is different.
Below I put a link to a video for anyone interested in MPW. It’s by a guy named Chuck Carnevale of FAST Charts. It’s very informative on the stock and where the health of the stock stands. Please watch, it’s about 20 minutes.
Just a reminder, I do not recommend stocks. I only tell you what I’m doing. We all have a different risk tolerance and wallet size. You must do your own homework and pick your investment strategies according to these factors.
If you have any questions on my strategy send me an email.
Successful trading,
Steve
The Options Coach