Investment income – December, 2017

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!)

I was with great excitement that I prepared this report. After all, December has always been our biggest month (by far) for our investment income, and I’ve been looking forward to seeing how things turned out this month. This report includes income from dividends, mutual funds, and rental properties.

Here is our investment income for December:

 

 

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

December is a great month for a few reasons:

  • Our investment income is high
  • Our income streams are diversified (27 different sources, although some of them are so small as to be trivial)

Total dividend income was $11,771.19. Our dividends were 89.05% of our monthly investment income.

Our index funds typically pay dividends twice a year – a small payment in June and a larger payment in December. Total income in December from mutual funds was $3,430.96.

The individual stocks that paid the highest dividends for the month were, in order,  BP ($468.28), Johnson & Johnson ($429.89), and Target ($378.88). When I look at our income I like our diversification.

In the past some readers have asked me about some of our very small investments (like Yum Brands and Hershey’s). These are remnants from my Loyal3 account where I was investing $50/month in a variety of blue chip companies. Unfortunately, Loyal3 shut down. I don’t want to liquidate these investments, as we were in the highest marginal tax bracket in 2017 and any capital gains would have been taxed at 23.9%. I’ll evaluate these investments in 2018 and decide if we want to add to them (to bring them up a full investment percentage) or sell them.

I’ve broken out interest income (which is fully taxable at our marginal tax rate) from our tax-free interest (from CA muni bond mutual funds).

 

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.

This was a great month for the rental properties. The only caveat is that I accidentally paid one of our mortgages twice, which crushed our cash flow for the properties we own with my mom. Even with that mistake our income from the rental properties was positive.

Rental income was $1,447.79, which was 10.95% of our monthly income.

 

Total investment income this month

Total (dividend + rental) income = $13,218.98

Here’s what our monthly numbers have looked like since I started publishing them on my website:

 

As expected, the graph has a peak at the end of each quarter, when dividend income is at its highest. Rental income has been a bit more stable.

 

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.

 

 

Investment income over the last 12 months = $62,862.80. 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 rent 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!

 

Quarterly investment income trend

The fourth quarter of 2016 was the first quarter I had full investment income information for. Now that the fourth quarter of 2017 is in the books I can do my first year over year quarterly comparison:

 

 

That’s a pretty solid result. Q4 of 2017 was up 35.6% over Q4 of 2016. That’s excellent growth. Both our dividend and rental income was up year over year, and that’s in large part because our rentals had a pretty bad Q4 2016.

If we can continue to increase our investment income by anywhere close to 35% in this next year I’ll be a very happy man.

Recap

December was a great month. Our dividend income was huge and our rental income was consistent, even with my mistake of making double payments on one of the properties.

I’m going to put together a full 2017 investment performance review, with more information on our monthly numbers, comparisons to previous years, and breakdown of our individual investments. Feel free to subscribe to my blog to ensure you don’t miss it when it’s published.

 

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?

11 thoughts on “Investment income – December, 2017

  1. Holy smokes. You rocked it this month. That is awesome all those dividends coming in even the small ones. makes me want to get a job and pump up my incomes lol. Hopefully soon. Reading these are truly an inspiring. Keep it up cant wait to see what you bring in next year.

  2. Thanks – I’m looking forward to next year too. I’m really hoping I have a chance to deploy some of our cash. It’s awfully boring to sit around for month after month and not make any investments.

    Of course, the way to big gains is to wait until awesome opportunities present themselves and then get aggressive…

    1. What if Mr. Market doubles again before making a correction? I wonder about this. I have 3+ million in cash waiting to be invested and the cash pile keeps growing each year (from sale of stock). Has been an awful decision so far to not put it to work right away, and a worse decision to sell along the way.

      1. I have those same concerns. Nobody knows for sure what the market is going to do tomorrow, next month, or next year. All we can do is make decisions based on facts and deploy our money when it’s to our advantage to do so.

        It helps to look at history. You can count on one hand the number of times that the PE ratio of the market has been higher in the last century. This is already the second longest bull market in history. Valuations are pretty out of hand.

        Yes, it’s very, very hard to sit there and watch the market go up, but investing today does not put the odds in your favor.

        1. I’ve seen charts comparing our current bull market to 3 other extended bull markets in the past century, and we aren’t even close yet in terms of duration and percentage increase. I also don’t see much euphoria anecdotally yet. I lived through the dot com boom and bust at ground zero, this current bull feels nothing like that…

              1. I think you’re right – definitions matter a lot.

                My concern right now is that everything is going well – unemployment is low, interest rates are low, there’s general peace around the world, and consumer confidence is high.

                Where do things go from here?

                Ultimately, I think I’ve just been through enough market cycles and seen lofty market valuations get crushed enough times to error on the side of caution at this point in time.

  3. Wow, this is awesome. Thanks for putting it all there like that.

    Just a note, capital gains were bonkers in 2017 for a lot of the stock market. I personally consider capital gains an “income” because I could liquidate them at any time, however it isn’t necessarily consistent year over year so you just have to consider average growth rather than year-to-year growth.

    1. That’s an interesting idea. I don’t consider anything income unless it’s actually money in my pocket, but I understand what you’re saying. I think what you consider income is what I’d consider a chance in net worth (which includes what I call “income” plus capital gains).

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