I always love reading blogs about other investors’ investment income. Watching other people’s investment income rise is my second favorite thing (the only thing better is watching my investment income rise!)
This report includes income from dividends, mutual funds, and rental properties.
Here is our investment income for April:
Every month I’ve been tweaking (and hopefully improving) the format of my income report. Please let me know if you have any suggestions on how I can make it even better.
Dividend & Interest Income
The first month of each quarter always generates the least investment income. Over 50% of our dividend income came from 3 sources – BP ($496.80), Altria ($416.97), and Philip Morris ($276.25). Given that those companies drill for oil and sell cigarettes, it’s pretty easy to see why I call the first month of the quarter my “sin month”.
We received a bit of income from a few very small investments ($9.46 from Dr. Pepper Snapple Group, for example). I’ve since liquidated these smaller holdings in an effort to simplify my portfolio and concentrate on my best ideas.
Total dividend income was $2,003.22, which is up 60.5% from last April’s dividend income of $1,247.89. Our dividends were 77.78% of our monthly investment income.
Overall, a solid but unspectacular month for our dividend and interest income.
Rental income
This category includes net income from the 4 rental properties that my wife and I own, plus 50% of the income from 4 rental properties that we own with my mom. This number does not include appreciation of the properties or the decrease in the mortgage balance (those numbers show up in the net worth report).
However, this income is net of all mortgage, tax, and insurance payments. That is, this is a true cash flow report for our rental properties.
One of our properties remains vacant as repairs/improvements are made on it. Thankfully, the rest of the properties continue to perform well. This meant that even without any income from one property we still had a net positive rental income for the month.
Rental income was $572.11, which was 22.22% of our monthly income. This is down substantially from the previous April’s rental income of $1,717.87.
Total investment income this month
Total (dividend + rental) income = $2,575.33
Our total income for April, 2017 was $2,965.76. This means our investment income for April 2018 was down almost 14% from April of last year.
This is why I prefer dividend income to rental income. First, it’s truly passive. Second, you can never lose money in dividends. That is, the worst case scenario for dividends is that they get cut to zero and you have no income. The worst case scenario for real estate is potentially unlimited losses.
Trailing 12-month investment income
Here’s what our trailing 12-month income looks like. Since I only started tracking these numbers in Sept, 2016, I only have actual 12-month totals starting in August, 2017. I’ve annualized numbers before that date (that is, if I had 6-months of income data then I would double it to get a projected 12-month number). In 2016 I only had a few months of data to work with, so small fluctuations would cause my projected 12-month number to jump around. I think this number will start to stabilize now that I have 12 full months of data to use in the calculations. And, in fact, if you look at the graph after August, 2017 you see a much smoother line that slowly trends up (with a dip over the last 2 months).
Investment income over the last 12 months = $62,921.99. Note that this is our actual income over the last 12 months, not a projection. I would expect our income over the next 12 months to be higher as new investments are made, dividends and rents are raised, etc. Just putting our cash reserves of $750,000 to work should result in another $22,500/year of income (assuming a 3% dividend).
Our goal is eventually have $120k/year in investment income, so we are 52.4% of the way there! Unfortunately, this number has been trending down for the last 2 months due to the vacant property. Not only are we losing rent of about $850/month, but we are paying to make some repairs/improvements to the property.
Recap
April 2018 was an ok month for our investment income. Our dividend income was good but our rental income was poor. Hopefully we can get the unit rented out ASAP so we can start getting rental income from that unit again soon.
I’m really, really hoping we will see a serious market correction soon, as I’d love to put some of our cash to work. Absent a market correction I’m also investigating some foreign investments – valuations overseas are significantly more reasonable that valuations in the US market.
How did everybody else do with their investment income this month?
Are there any investments out there trading at reasonable valuations that I should be looking at?
Love your updates as they provide some real incentive to follow your footsteps. That said, I also eagerly await/ dread the upcoming correction. I am trying to save money for later opportunities while also buying some stock in the short term.
The waiting is without a doubt the hardest part. You just need to resign yourself to the fact that you might need to wait YEARS before you’re able to buy in at attractive valuations.
How do you know when to stop waiting? Many quality biotech stocks are already 30% off their highs, many consumer staple stocks are over 20% off their highs. GILD, GIS, O, MMM, JNJ, PG have all come down quite a bit. Many energy stocks were at multi-year lows before recently rallying.
Thanks for sharing this valuable information with us. Keep doing good work and keep sharing with us. Looking forward to your next post.
Thanks for the kind words.