Investment income – September, 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, mutual funds, and rental properties.

Here is the breakdown for September:

 

The last month of a quarter is usually a good one for our passive income and September was no exception. Our rental income was finally back in the black and we received almost $10k in dividend income.

Dividend & Interest Income

For whatever reason, the majority of businesses we own stock in pay their quarterly dividend on the last month of the quarter. The dividends themselves were pretty evenly distributed across our investments, with our largest single dividend payer (BP, $481.16) only accounting for 5.1% of our dividends for the month.

The largest individual payers, in order, are BP, Johnson & Johnson, Chevron, Target, and McDonald’s. That’s reasonable diversification across industries (BP and Chevron are obviously both oil/energy companies, of course).

The 401k and the IRAs are invested entirely in a S&P 500 index fund. Mutual funds were thus responsible for 70.81% of our dividends for the month. All of the funds we own pay quarterly, so this income is concentrated in just 4 months of the year.

Total dividends received were $9,442.37. 

 

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 decent month for the rental properties. There were a few repairs that were needed, but at least we were a net positive for the month.

Total rental income was a mere $891.94.

Total passive income this month

Total (dividend + rental) income = $10,334.31

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.

Here’s what our quarterly totals have looked like. I tend to concentrate more on these numbers as they smooth out the monthly ups and downs.

The rental income in particular has been highly variable. This is due to some needed repairs on a few of the properties. The dividend income is much more consistent, with a nice increase each quarter of this year. I fully expect the dividend income in Q4 of this year to be higher than Q4 of 2016.

Unfortunately, our rental income was actually NEGATIVE for the entire third quarter. We put new tile floors in one our properties. The tile floors are replacing some worn carpet – the expectation is that these tile floors will reduce ongoing maintenance expenses, as they should need little to no work for the next 10-20 years.

Trailing 12-month passive income

Last 12 months passive income = $57,604.38

This is not a prediction for the next 12 months – it is the actual passive income received in the last 12 months. Our goal is eventually have $120k/year in passive income, so we are 48% of the way there.

I would expect the next 12 months of income to be higher than the last 12 months as dividends are increased, rent goes up, and new money is put to work.

 

Recap

September was a good month. Our dividend income has been consistent and our rental income did better than in the previous two months.

We have approximately $1M in cash ready to be deployed. If we were to put that to work at a 3% return then we’d expect to receive at least $87,604.38 in passive income next year, which would be 73% of the way to our goal.

 

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

Are there any investments out there trading at reasonable valuations that I should be looking at?

4 thoughts on “Investment income – September, 2017

  1. I’m surprised your rental income isn’t more (maybe you have a sinking fund for cap improvements?) Curious, what is your approx. cap rate on them? How much time do you spend monthly managing and in your opinion is it worth it? I am mostly an equity investor but do consider investing in RE now and then. Also, I couldn’t find your contact info on your blog. I live near you (NW LA area) and would be interested in meeting up to bounce some ideas. If interested please PM me.

    1. The properties we have purchased were on the less-expensive side. Average purchase price was probably around $125k for each of the 8 houses.

      Off the top of my head I’d say that average rent is $1,000/month and mortgage (P+I), taxes, and insurance probably averages $800/month. That leaves, on average, about $200/month of cash flow, and that’s before any repairs or improvements. Due to depreciation all of this cash flow has been tax-free and will be for the foreseeable future. The real money we’ve made has been from equity gains. I need to run the numbers again, but the last time I checked we were averaging about 15-20% returns/year on our real estate investments (cash flow + equity).

      4 of the properties are handled by a property manager. The other 4 are managed by my mom. So I spend little to no time on the properties each month. The only thing I do is run the numbers so I can generate monthly cash flow reports, etc. This is 1-2 hours/month. Given the small amount of time I spend on management I’d say the properties have been worth the investment.

      I just emailed you – I’d be happy to meet up sometime to discuss real estate investments!

  2. That’s some serious income! Love that you’ve got two different income streams (dividends & rental). I share a few names with you when it comes to Sept. payers: JNJ, AFL, PEP, HSY. You’ve got some companies paying large amounts, while other dividends are rather small, comparatively speaking. Do you have plans to keep things as is, or might you be looking to add to the smaller positions over time?

    1. Good question. Right now I’m just trying to deploy our money in places that I think offer reasonable valuations. However, if I’m trying to decide between two existing investments and we are very underweight in one of them then I’d be more likely to attempt to improve our diversification by investing in the underweight investment.

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