Growing Dividends and Harvesting Options
EOG is in the energy sector and the focus is “Oil and Gas Exploration and Production.” There aren’t too many energy companies that fit my investing requirements as well as EOG. If a company increases their dividend by 10.3%, I smile. If they have a history of increasing their dividend and have a payout ratio of 26.46%, the smile gets bigger. If the rate of the increase over the last five years has been 34.22%, then I might just jump up and down. So it is with EOG.
EOG Resources, Inc.
EOG Resources, Inc., together with its subsidiaries, explores for, develops, produces, and markets crude oil, and natural gas and natural gas liquids. Its principal producing areas are in New Mexico and Texas in the United States; and the Republic of Trinidad and Tobago. The company was formerly known as Enron Oil & Gas Company. EOG Resources, Inc. was incorporated in 1985 and is headquartered in Houston, Texas.
Dividend Income for 2022-2023
EOG has not been a part of my investment portfolio for a long time. I bought shares in 2022 and I am glad that I did. During the last two years we have received $4,315 in dividends on my 400 shares. Some of the shares are in my ROTH, and some in my traditional IRA.
Options Income for 2022-2023
EOG is a two-banger for me. Because I trade covered call options, I have been able to (thus far), gain $4,214 in options income. This was not without some nail-biting, as there were times when it looked like my shares would be called away. However, it is possible to delay that or avoid it by “rolling” the option. To do this you buy a closing option and, at the same time sell a new covered call option at a higher contract price and a later expiration date. In the following illustration you can see that I had to buy/sell four times.
Easy Income is Designed to be Easy
So the easy income I desire is the best way to get additional spendable income without any extra work. However, with a little extra work (about 15 minutes per week) I can make some sweet additional income. The only “risk” is that my shares could be called away.
Dividends Matter
Dividend graphs help me understand the history of a company’s dividend. However, all dividends are only as good as the growth and profitability of the company. Therefore, it is never absolutely certain that you will continue to see increased dividends for any investment. Here are two images that display EOG’s dividend history and metrics.
Because some of my options income and dividend income (from 200 shares) is in my ROTH IRA, all of that income is federal and state income tax free. That makes the dividend worth even more.
In Conclusion
CAUTION: I feel a sense of responsibility to my readers. Therefore, don’t buy EOG without understanding that all investments have risks. The current Seeking Alpha QUANT rating for EOG is “HOLD” rather than “BUY.” The energy sector can be quite unpredictable. Don’t put all of your eggs in one basket.
Know Your Flocks & Herds 