I bought OHI in my traditional IRA in late 2016 by writing a put option. The option paid me a couple thousand and I was assigned 900 shares at $35. As the price fell (due to Trump's election) I sold half the position for $30. With that water under the bridge, the plan for my remaining shares was to aggressively write calls while simultaneously collecting the quarterly dividend (~$288). I closed out the experiment late last year at $27.45 with a total net loss of over $1,400. It would have been worse without the calls.
The tragedy was:
1) OHI fell faster than the dividends plus covered call income...
2) during a very high returning year for the stock market...
3) due to realization of two major risks facing healthcare REITs: repeal of the ACA and liquidity problems at a major client related to insufficient medicare/medicaid reimbursements.
With this experiment concluded, I'm done with high-dividend stocks. It's all too easy to give oneself a narrative that those known risks that keep the yield high will never materialize and then poof... when they do you own a company with limited financial flexibility that is unable to escape its trouble. Company-specific risk is a portfolio killer. I should have been indexing the S&P or nasdaq in hindsight.
