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!)
Here is our investment income for August, 2022. This report includes income from dividends, interest, mutual funds, and rental properties.
Overview
Here’s what our investment income looked like for the month:
Dividend & Interest Income
Total dividend income for the month was $3,062.45. This is up 61.3% from last August. This is mostly due to the new investment in British Tobacco, although the dividend payments from all of our investments are up year-over-year.
Rental income
This category includes net income from the 6 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.
Total rental income was $4,003.91 for the month. We had some minor repairs and other non-regular costs, but overall the properties performed pretty well this month.
Total investment income this month
Dividend + rental income = $7,066.36
Our total monthly passive income was up 757% from last August. That’s mostly because our rental income last August was negative and this month it was positive.
The big achievement this months is that our trailing 12-month passive income of $123,408.83 finally crossed our short-term goal of $120,000. I think that puts us something like halfway to the amount of passive income we’d need each year to retire, but it’s a nice achievement.
Changes
I purchased 3,000 shares of Paramount @ 24.48/share for a total cost of $73,432.43.
I purchased 400 shares of Google @ 114.84/share for a total cost of $45,934.
Recap
It was good to hit another milestone (>$120,000 in passive income for the last 12 months), and it’s always great to have our investments perform well.
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?
How do you determine which stocks are safe/viable options for dividend investing?
Well, there are really no “safe” investments. Even the “risk-free” asset of the 10-year treasury isn’t risk free. There might be little to no risk of not getting your investment back, but all fixed-income investments are exposed to inflation risk. If you buy a $10,000 bond and get 4% interest per year for 10 years, then get your $10,000 back, that $10k will have a lot less purchasing power if inflation has risen to 10%/year for those 10 years.
That being said, I tend to have a few rules for picking my dividend investment stocks. I only invest in companies that are already profitable, and have preferably shown that they can maintain that profitability through the ups and downs of the business cycle. I prefer companies that have paid a steady and/or growing growing dividend. Finally, I like buying the companies when they’ve had some recent weakness (general stock market decline or short-term company-specific issue).
From a passive income standpoint, do you think you will eventually focus more on RE?
I think I’ll probably end up focusing LESS on RE, for the simple fact that RE just requires a bit more work than dividend investing.
If you are directly owning RE your income flows are irregular and you have monthly accounting to deal with. You have to worry about tenants, repairs, etc. Then you have some additional work to deal with the tax implications of the properties – depreciation, expenses, etc. It’s just a bit more headache.
With dividend paying stocks you literally have to do nothing. You buy the stock and the money automatically appears in your brokerage account every 3 months. You could disappear for 5 years and the stocks would continue paying your dividends with no decisions or involvement required on your side.
The only reason I could se myself getting more into RE would be as something to do in retirement. But in that case I’d be going into it with my eyes wide open, knowing that I’d be essentially taking on a part-time job to manage everything myself.
I hear you in managing individual rentals…I was thinking more hands off stuff like syndicated RE investments where you are just an LP.