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 March, 2021. This report includes income from dividends, interest, mutual funds, and rental properties.
Overview
Without further ado, here’s what our investment income looked like for the month:
Dividend & Interest Income
Total dividend income for the month was $13,808.47. This is virtually unchanged from March 2020 (down .11%). I was somewhat surprised by this, but when I dug into the numbers I saw that the dividends from most companies have increased, but a dividend reduction from BP cancelled out the rest of the increases.
Our long-term goal is to have our dividend income increase by 10% per year, and unfortunately we came up short in 2020. My goal for 2021 is to receive $88,000 in dividend income (vs. $80,396.95 in 2020). Through the first 3 months of 2021 we are on track to receive just $70,600 in dividend income for the 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.
All properties are rented and we were finally back in the black for our rental income ($667.64 for the month). We had a new tenant in one of the properties last month, and because of the timing of the payments we didn’t receive a rent payment for that property this month.
Over the last few years our rental profits have been erratic. This is unsurprising, given the number of rentals we have. We have a few improvements scheduled for 2 of the properties, so we’ll likely see some more negative months later this year.
Total investment income this month
Dividend + rental income = $13,808.47
Total monthly income was down 5.75% from March, 2020, primarily due to mediocre rental income.
Year to date our total income is 23% lower than through the same point in time in 2020. Our dividend income is down just 9% from 2020, but our rental income is a brutal 60% lower than Q1 of 2020. Definitely a rough start to the month.
Changes
The options that I have purchased last month have expired worthless. The Tesla options were up pretty big at one point, but Tesla rebounded sharply and stayed above my strike price.
The S&P puts are good for another 2 months, and I continue to think they are reasonable protection against what seems to be an incredibly overvalued market.
Recap
Last year and this year have been pretty disappointing for our passive income. It looks like our passive income peaked in 2019 at just under $100k and was down to $90k last year. So far we are on pace for roughly $82k in passive income in 2021.
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?
I’ve recently discovered your blog and have been following it only for a few weeks. Can you explain the entries for “401k” and “IRAs?” Is this dividend income from stocks / mutual funds in those accounts? (If so, why don’t you break it out into individual companies?) Is it employer match money? I think you are too young to be withdrawing money from those… Those two account for almost 30% of your income, so I’m curious about the details.
What are your thoughts on passive income via Rental Properties versus Stocks/Dividends? I imagine dividend income maybe easier in that you don’t have the hassle of maintaining real estate and/or destructive tenants.
Appreciate your input!
Well, as you can tell from our asset allocation, we have much more money invested in dividend paying stocks (and equities in general) than in real estate. I primarily use real estate for diversification and as a replacement for bond income in our portfolio.
Real estate has the advantage of non-callable leverage, which juices the returns. However, the big advantage of dividend income is that it can never be negative. Your dividend income could theoretically go to $0, but you’ll never lose money on dividends. Unfortunately that’s not true with real estate. Due to repairs, improvements, vacancies, etc. it’s very possible to lose money in any given month on real estate.
Bottom line – they both have their place in a person’s passive income portfolio, but real estate takes more work and can potentially be negative. With dividend income you can make your investment and there’s literally nothing you ever need to do again.
Yes, the IRA and 401K entries are for the dividend income from the investments in those accounts. I list them separately because $1,000 in dividend income in a 401k is not the same as $1,000 in dividend income from a taxable account. I will eventually have to pay full income taxes on the 401k income, whereas the taxable account is taxed now, but at the lower dividend/capital gains rate.
I only hold mutual funds in my tax deferred accounts, so I figured there’s no good reason to list the detailed sources of income from those accounts.