The Portfolio page on my blog has been updated as of September 30th, 2016. This page outlines my portfolio of taxable investments and the income generated on a yearly and average monthly basis. Click here to access all previous portfolio updates.
I track my stock purchases and investment income (aka passive income) publicly as opposed to net worth.
I still track my net worth (using the free and highly recommended tool, Personal Capital), but for me, sharing my portfolio and income streams is more aligned with reaching my primary financial goal, which is to retire completely and never work again at age 55.
Thanks to everyone who found this blog and continues to read my new material. I very much appreciate the readership and all the commenting. Please take some time to check out the Blogfeed too. It’s a great place to find related content written by my peers in the personal finance and investing worlds. Great new blogs added last week!
Trudging Forward In 2016
2016 is a humbling year. I’ve invested far less this year than in the previous two. My progress in building investment income has slowed. Some major financial goals I set at the onset of the year will not be met.
So what’s up? Well, the main culprit is weak cash flow. Our family’s expenses have crept up, this year more than any other. Babies are relatively cheap. However, it turns out toddlers start to get expensive. Our kids are 4, 3, and 1 now.
I knew this was coming, but it’s only starting to hit the bank account. Pre-school tuition is a big one, on top of dance classes, swim lessons, summer camps etc.
We’re a one income family and the suburban lifestyle is starting to take its toll!
I made some mistakes in the past year and I’m in the process of cleaning them up. I realized my problem earlier in 2016 year and started changing shit up. But there’s work still to do.
A recent item on the cash flow fix-it list was our mortgage refinance. That event swallowed some excess cash last quarter but boosted my cash flow in the long run. I used LendingTree to get competitive interest rates from a few different lenders.
These pauses are temporary. By not automatically investing, I have more cash left over at the end of each month that can go to the highest priorities.
I’m still investing $900 in college savings and maxing out my 401k contributions every month. And I’ve been building a healthy cash position.
In part, I’m building cash because I’m not seeing great opportunities in the stock market. I see some OK value. But I’d rather wait for larger pullbacks before putting new capital to work since I have other financial priorities.
There’s more work to do to fix my cash flow problem. The biggest cash flow crushing mistake I made last year is worthy of its own blog post. Stay tuned.
Investment Income Received In Q3 2016
The S&P 500 index settled at 2,168.27 on September 30th, up 3.31% for the third quarter of 2016. Year-to-date, the index is up 6.08%.
Here are the numbers for investment income I received in Q3 2016:
|Income Stream||July||August||September||Q3 Total||YTD|
|Interest on Cash||$12.91||$14.20||$15.04||$42.15||$107.82|
Compared to Q3 2015, my total investment income received grew from $1,728.11 to $1,997.84, up 15.6%. September was the second largest income month on record, bringing in $828.89 in combined passive income.
Summary of Investment Activity for Q3 2016
My investing slowed temporarily this quarter due to the refinance, cash building, and a general lack of enticing stocks. Fortunately, my lending activities at Lending Club (fueled by LendingRobot) have driven the growth of my forward looking income.
Plus, my dividend portfolio is always growing through reinvestment and dividend increases. That’s the compounding effect I love. Keep reading to the end to see which stocks rewarded shareholders with a dividend increase this quarter.
Here is a summary of investment activity for Q3 2016 including the 9 stocks I bought and sold:
Even with a decrease of -$1,617.17 in working capital in my taxable investment portfolios, my forward 12-month investment income (F12MII) increased to $7,776.77 or $648.06 per month. This was a $86.75 and 1.13% increase over last quarter, and a $1,074.33 and 16.0% increase year-over-year. I consider the $7,776.77 in F12MII the most important number because it represents an estimated amount of money I would earn via investment income if I stopped working today.
Here’s a chart tracking my progress as of September 2016:
The investing slowdown is starting to show on the chart and in some of the year-over-year numbers. Once my cash flow is back in order, I should start to see a steepening of the slope again.
Most investing activity was in my Loyal3 account this quarter. I was adding to five to six stocks regularly for the past year or so. However, in September, I stopped all automated investing and I’ll only be adding to my positions ad hoc.
Through regular investing, I’ve built good-sized positions in Disney (DIS), Berkshire Hathaway (BRK-B), Nike (NKE), Hasbro (HAS), and VF Corp (VFC). My Loyal3 account has a total of ten holdings and all but BRK-B pay a dividend. I’m selectively reinvesting the dividends in stocks that are undervalued. I use this Loyal3 stock ranking system as a guide.
In August, Loyal3 administered its first IPO of the year, At Home (HOME). HOME is a brick and mortar furniture retailer that competes with the likes of IKEA and Wayfair (W).
This was the sixth IPO I’ve participated in.
But the HOME IPO wasn’t much of a spectacle. The stock IPO’d at $15. It didn’t go far from there. Two weeks later I decided to move the money elsewhere.
Some IPOs have big one-day gains. Other times they fizzle.
The IPO markets have been quiet for all of 2016. Hopefully, the IPO markets will pick up in Q4 and 2017.
If you’re interested in learning more about how ordinary investors can invest in IPOs, please check out my other website Access IPOs.
TD Ameritrade is my primary brokerage account and has been for more than 15 years. It’s where most of my holdings are and where the dividends accumulate. It’s also pretty good for research. That’s where I filtered the debt-free S&P 500 stocks list.
Aside from dividend collection, the account was quiet in Q3. I completely sold out of one stock. That stock is Caterpillar (CAT).
My timing wasn’t great on the sale. I sold around $80 in July. Recently, the stock trades closer to $90.
But I don’t regret the move. For some time I’ve been uncomfortable with the amount of debt on the balance sheet. I wasn’t worried about its viability. Instead, I want to own great companies, not mediocre ones with a nagging ball and chain. Valuation is high and growth is slow. I decided I didn’t want to own the stock for the long-term and sold my position.
I invested the proceeds in early October. So I’ll save that position disclosure for the Q4 update (or see the purchase on the Portfolio page next month).
Fidelity Roth IRA
Last quarter I disclosed two new positions in Mrs. RBD’s Roth IRA. The first was Twitter (TWTR). Holy crap, that was a well-timed purchase. Twitter was facing all-time lows prior to the LinkedIn (LNKD) takeover. Since then, the stock has been on a roll. We bought 140 shares at $14.33 in late May.
Various new sources are reporting that Twitter is interested in a buyer. That narrative has driven the stock up to $24 in recent days. We’re up more than 60%.
We also bought some Chipotle (CMG) back in May. As Twitter began to run past our entry point, I decided to average down on Chipotle and bought more in July. We now own 11 shares at a cost basis of about $422.
I don’t usually buy these kinds of growth companies. But I sensed some opportunity, and so one has paid off. Both are companies and products we enjoy and use. So I’m very comfortable holding on for the long-term. The growth stories for both stocks are intact despite some headwinds for Chipotle.
7 Dividend Increases
Below is a list of dividend increases from my portfolio announced in Q3.
27 out of 42 dividend paying stocks in my portfolio have increased their payouts year-to-date. The average increase for this quarter was 6.40.%. This last quarter in 2016 I’m expecting (and hoping) to receive at least another 13 dividend increases. But I also fear some may be held steady.
- ACN 10% to 2.42 annual
- DOV 4.8% to 1.76 annual
- MSFT 8.3% to 1.56 annual
- PM 2% to 4.16 annual
- VZ 2.2% to 2.31 annual
- WTR 6.6% to .7652 annual
- YUM 10.9 to 2.04 annual
Thanks for reading, commenting and sharing on your socials. The final investment income update of 2016 will be published in early January. By then my cash flow problems should be lessened and I’ll be growing my income at a more reasonable pace.
Disclosure: The author is long all stocks mentioned in this article except W, HOME, CAT, LNKD.