Investment income – June, 2017

I always love reading blogs about other investors’ investment income. Watching other people’s passive income rise is my second favorite thing (the only thing better is watching our passive income rise!)

This report includes income from dividends, bonds, and rental properties.

 

Dividends  
TickerNameAmount
AFLAFLAC Incorporated$210.06
BPBP plc$473.27
CVXChevron Corporation$340.18
COPConocoPhillips$87.00
HSYHershey's$3.09
JNJJohnson & Johnson$429.89
LMTLockheed Martin Corporation$98.81
MCDMcDonald's Corporation$269.31
MSFTMicrosoft Corporation$72.43
PEPPepsi$10.47
TGTTarget Corporation$358.98
VVisa Inc$129.62
WFCWells Fargo & Co$183.88
VMMXXMoney Market$1.98
VCTXXVanguard California Muni fund$14.98
VEMAXVanguard Emerging Markets Stock Index Fund Admiral Shares$561.08
VEUSXVanguard European Stock Index Fund Admiral Shares$1,190.21
VIMAXVanguard Mid-Cap Index Fund Admiral Shares$892.81
VSMAXVanguard Small-Cap Index Fund Admiral Shares$424.63
401k$2,877.02
IRAs$539.02
Total$9,168.72
Rental Properties
4 properties owned 50%$439.40
4 properties owned 100%$1,016.31
Total$1,455.71
Total passive income$10,624.43
Annualized passive income based on last 3 months$60,547.15

Dividend & Interest Income

The last month of a quarter is always a big one. All of our mutual funds pay their dividends/distributions on the last day of the month. Our stocks pay more dividends in the last month of a quarter than in the previous two combined.

The largest single dividend payment was $473.27 from BP. The second largest was $429.89 from Johnson & Johnson.

We also picked up significant payments from our mutual funds ($1,190.21 from the European Stock Index) and our retirement accounts.

Right now I’m trying to figure out what to do with this money. I’m reinvesting dividends into the stocks I think are fairly valued or undervalues (Target, BP, Chevron, and Wells Fargo). For all of the rest of the dividend payers I’m just accumulating cash so I’m ready to pounce if/when the market’s finally regains its senses and valuations drop to something more reasonable.

The smaller dividend payers (Microsoft, Hershey’s, and Pepsi) are from my Loyal3 account. As most of you probably know, Loyal3 closed down, so I transferred those shares to my Merrill Lynch brokerage account. I’m not sure if I’ll be selling them, holding them, or adding to them. If I do decide to sell it won’t be until next year – this year I’ll be in the top tax bracket. That means that instead of paying 15% on long-term capital gains I’d be paying 20% + 3.8% Medicare surcharge. I’m happy to wait 6 months to save 8.3% on taxes.

Total dividends received were $9,168.72. That’s fantastic.

 

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).

This was a solid month for the rental properties. Everybody paid on time and there were no major expenses.

Total rental income: $1,455.71. 

Total passive income this month

Total (dividend + rental) income = $10,624.43

Annualized passive income based on last 10 months of income = $60,547.15

 

 

I calculate the annualized income because it smooths out the differences in income from month to month. This is not a prediction for the next 12 months, as it is backward looking rather than forward-looking. However, it’s a good metric to give me a rough idea if we are on track to achieve our saving/investing/income goals for the year. I use 10 months because that’s how long I’ve been tracking and posting my monthly investment income. Starting in August, 2017 I’ll be able to calculate and post my trailing 12-month income.

As you can see, our annualized income has been pretty steady since December, mostly bouncing around $60k. This is because I’ve been

This is only the second time our monthly passive income has exceeded $10,000 (the other was December, 2016).

We are just over 50% of our way to the goal of $120,000/year in passive income. My hope is that I’ll be able to use most of my upcoming commission checks to increase our average monthly income by 50% by this time next year.

 

How did everybody else do with their passive income this month?

8 thoughts on “Investment income – June, 2017

  1. $Commando, thank you for sharing. I am thoroughly enjoying your posts ever since I first stumbled upon your site a week ago. You seem to have all the diversity one could want in their portfolio and yet I read that you are trying to figure out what to do with some cash sitting on the side.

    I realize you are a bit long real estate (maybe more so if your private equity deals are real estate), but have you given any thought to P2P lending? I personally have gone into real estate crowdfunding? After years of being a landlord, myself, I was looking for a more passive way to get real estate back into my portfolio. Or Lending Club and Prosper are good websites that offer loans to individuals, but I’d rather have 1st lien on the real estate asset to mitigate my downside versus someone’s “ok” credit.

    1. Church – I’ve definitely done quite a bit of research on real estate crowdfunding. There’s a lot to like about it. I’m especially interested in the hands-off aspect (even though I have managers for each of my properties I still have to deal with random issues here and there like city ordinance infractions or approving repairs). I haven’t yet decided if I’ll move into the crowdsourcing. My concern is that the model hasn’t been proven in a downturn (all these companies are just a few years old). In addition, when I was looking at the bios for many of the principles in these deals I saw that many of them had lost a bunch of properties in the Great Recession. To me that indicates that they might be using a bit too much leverage and getting a bit too aggressive. I’m a big believer in the idea that you only have to get rich once. Once I have enough money I don’t see a reason to allocate money towards an unproven idea. If these companies are still standing after the next recession I will get very interested.

      1. “Unproven” is a completely rational concern about these new platforms. Certainly a risk you can’t completely hedge, but a known risk.

        The only comfort I get is to invest into properties with low LTVs and a year or less. It doesn’t completely cap my downside risk, but helps me sleep a bit better at night.

        Thanks for sharing your thoughts.

        1. One other thing I should point out – it’s not just the platform that’s unproven, it’s the business model and the developers. If you’re a successful investor with a track record of success I would think you wouldn’t have a problem getting regular commercial financing. Doing a deal with one of these platforms typically requires the developer to sign up for a “waterfall” model. That is, the developer makes NOTHING until some minimum level of return has been achieved. A typical deal might look like this: first, all cash flow goes to pay the required monthly debt. Then any remaining cash flow goes to the investors through the platform until they achieve a 6% return. Then the cash flow is split 50/50 between investors and developers until the investors have achieved a 12% return, then all additional cash-flow is split 25/75 between investors/developers.

          If you’re a developer, wouldn’t you prefer a model where you take a standard bank loan and get to keep ALL of the cash flow/profits? The only reason you’d accept this type of waterfall model is if you don’t have a choice.

          There are, of course, debt offerings, where you’re put in the position of senior debt. That’s certainly safer than an equity position, but it won’t matter if the deals are bad and don’t make money.

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