Investment income – July 2016

chart-clipart-k9589268When I read other financial blogs one of my favorite type of post to read is the breakdown of investment income. Watching other people’s passive income rise is my second favorite thing (watching my own passive income rise is the only thing better!)

This report includes income from dividends and my rental properties. However, it doesn’t (yet) include any of the income in tax-deferred accounts (401(k), IRAs, and Roth IRAs), as that income isn’t going to help me retire early. Although I don’t own any now, if I have other sources of passive income in the future (CDs, bonds, etc.) I’ll include them here as well.

Dividend Income

The equity portion of our portfolio is roughly 50% index funds and 50% individual stocks. The mutual funds are from when I started investing. I was much more interested in simplicity and a low time commitment so I could focus my time on my career. As my investing philosophy as evolved over the last few years I converted some of my index funds into individual stocks. However, I’ve owned the index funds long enough that selling them would generate a substantial tax burden. As a result, I’ve decided to hold the index funds and direct all new investment money to my stock portfolio.

Here’s how my portfolio did last month:

Ticker Name July
MO Altria Group Inc $336.56
BNS Bank of Nova Scotia $143.92
KO The Coca-Cola Co $136.49
DE Deere & Company $168.86
ITW Illinois Tool Works Inc. $109.14
MDT Medtronic PLC $147.68
NKE Nike Inc $63.68
PM Philip Morris International Inc. $263.34
Total $1,369.67


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.  We bought these properties in 2012 and 2013 because real estate prices were ridiculous low. I did the math and projected these would be cash cows, and so far that’s proven to be correct.

Note that this number is just the cash flow from the properties (rents minus all expenses, including management fees, mortgage, insurance, repairs, etc.) This number does not include appreciation of the properties or the decrease in the mortgage balance.

Total rental net income = $1,247.65


Total passive income

July, 2016 passive income = $2,617.32

Annualized passive income (assuming no increases in rents or dividends and assuming no investments = $ 31,407.84

The first month of every quarter is always a light quarter from a dividend perspective. As I mentioned in my post about mutual funds vs. stocks, the problem with funds is that the payouts can be erratic. All 4 of my mutual funds have a quarterly payout, but the payouts vary from quarter to quarter, so it’s unlikely that I’ll see a nice consistent quarter over quarter growth in our passive income.

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

7 thoughts on “Investment income – July 2016

  1. Hey I really like your blog. I am a big fan of sites that reveal net worth figures and income flows. There is something very compelling in watching the numbers build up every month.

    I have kept my own records for the last 12 years and when things seem to be dragging I can kick start my enthusiasm by looking back over the numbers and seeing how far we have come.

    The markets have certainly helped the figures over recent times but the really noticeable thing now is the compounding effect when you have so many assets built up. My graph has shown a considerable upturn in recent years as the value builds in all the areas of the portfolio.

    I look forward to following your progress.

    1. Troy – thanks for the note! Being able to look back on your progress and see how far you’ve come is pretty empowering. And, as you said, when you get to a certain point the compounding effects from your assets significantly outweighs any additional investing. I’m considering dialing back my savings from this point on, but I’ve been saving and investing for so long I think it would be really tough to change.

  2. Good post. I like how your income splits equally between dividends and rentals. Of course, for a global executive like me with no interest in owning real estate and its hassles (we are perennial renters!), 100% of our passive income comes from dividends. REITs are about 15% of my portfolio, my compensation for not owning my home! I live with the risk of dividend cuts,so target to get to sizable cushion in dividend coverage, say 150-200% of expenses.

    1. I’m actually thinking of purchasing some more rental properties. I see a lot more value in real estate right now than in the market. Of course, dividends are a lot simpler than real estate. There are no management hassles, no vacancies, and no maintenance requests. On the other hand, my returns over the last 3 years on my rental properties have been much higher than in the market, and I believe my rental properties will hold up better in a downturn.

  3. I really like your articles. Well thought out. My only question is owning S&P 500 index fund. I have to own the good with the bad(health Deteriorating stocks). I don’t want to invest in Coke, Pepsi, Phillipmorris, Monsanto, McD etc. You get the point. I really hurts me when I educate people to avoid cigarrates or junk food and I invest in S&P 500 there by investing in the above companies mentioned.

    With all due respect by investing in phillip morris company I feel like the investors are pushing cigarettes in people’s lives. What do you think? Thanks

    1. I’m working on a blog entry on this very topic, but the short answer is this – owning the shares of a company does very, very little, if anything, to support the company. You owning or not owning shares of a company will not affect the company’s fortunes, and might even help, as shareholders have the right to vote and affect the company’s direction and decisions.

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