Investment income – January, 2018

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!)

It’s always a bit of a letdown to prepare the January report, as December is consistently the best month of the year. January’s investment income always seems downright sad in comparison.

This report includes income from dividends, mutual funds, and rental properties.

Here is our investment income for January:

 

 

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

Ah yes – the glory of sin stocks. The first month of each quarter is when we receive our dividends from our tobacco investments. Altria and Phillips Morris combined for 19% of our income for the month. We made these investments a few years ago and I haven’t added a penny to them in a few years, yet they continue to perform amazingly well. I think they are overvalued right now, but if valuations were to improve I’d be happy to add more to these investments. I’ve had people ask me about the morality of investing in companies that product products that kill people. Here are my thoughts:

  • Cigarettes are poison. I’ve never smoked and never will.
  • Owning or not owning any given stock is not going to help or hurt the company
  • Altria and PM are rapidly moving to iQOS, which are heated (rather than burned) tobacco products. These are substantially safer (and less obnoxious to everybody else) than cigarettes

Total dividend income was $1,538.80. Our dividends were 43.75% of our monthly investment income.

 

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. All properties are rented (although I just received notice that one tenant will be vacating on March 1) and there were minimal repair costs. This is about as well as the properties can perform.

Rental income was $1,978.70, which was 56.25% of our monthly income.

 

Total investment income this month

Total (dividend + rental) income = $3,517.50

Our total income for January, 2017 was $2,672.98. That’s a solid 31.6% improvement over last year!

 

 

 

 

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 from August, 2017 to January, 2018 you see a much smoother line that slowly trends up.

 

 

Investment income over the last 12 months = $63,707.32. 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 53.1% of the way there!

 

 

Recap

January, 2018 was a solid month. Our investment income was pretty evenly split between dividends and rental income and both performed well.

Looking ahead to next month, it looks like dividend income in February is usually a bit better than January. The wildcard will be our rental income.

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?

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