The Portfolio page on my blog has been updated as of December 31st, 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 and progress toward retirement (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.
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Tough Choices in 2016
It’s been three-and-a-half years since Mrs. RBD stopped working completely. After our first child, she continued working part-time. She quit in summer of 2013. As our children were still young, we managed to keep our expenses low, leaving plenty of cash for monthly investing.
But this year, our single income and growing kids finally caught up to us. We saw a significant increase in pre-school tuition and kids activities as my son started the five-day program, and my daughter started her first year. We also borrowed money to buy a mini-van last year to accommodate a third child.
These two costs hit our cash flow hard and hurt our ability to invest. Once I came to my senses, we started changing shit up with our finances. We refinanced our mortgage which took a chunk of cash for closing costs. Then we decided to pay off the mini-van with one $12,852.20 payment. These moves freed up about $900 in cash flow.
Saving the cash to make that happen decreased our ability to invest in taxable accounts. We still managed to invest $34,300 tax-advantaged accounts (401k, Roth, and 529 college savings), and some money into Lending Club, dividend stocks, and a few IPOs. But it was nothing like 2015. Free cash flow was limited, so taxable investments (the ones I track on this website) took a backseat.
As new investments slowed, the investments I’ve accumulated over the past 20 years still paid me. I sold very little, and my income grew through price appreciation and dividend increases. That’s the great thing about investing for income. Your money works even as your not making new investments.
Investment Income Received In Q4 2016
The S&P 500 index settled at 2,238.83 on December 30th, up 3.25% for the fourth quarter of 2016. For the full year, the index was up 9.54%. My taxable portfolio gained about 12.7%, beating the S&P 500 but not the Dow (+13.42%).
Here are the numbers for investment income I received in Q4 2016:
|Income Stream||October||November||December||Q4 Total||2016 Total|
|Interest on Cash||$10.48||$10.55||$16.98||$38.01||$145.83|
These are still great numbers for the year. Dividends received of $5,303.99 was a 19% increase over 2015’s number of $4,441, and beat my goal by more than $100. The growth was fuel by late investments in 2015 and dividend increases.
The total investment income received of $7,731.93 is awesome considering I did almost no work to earn it. Even the rental property was quiet in 2016. I just collected rent and dropped off a few air filters. The total income I received increased 25% year-over-year, up from $6,175.06 in 2015.
Summary of Investment Activity for Q4 2016
The Q4 2016 continued to be slow for putting new capital to work in my taxable accounts. A good portion of cash flow went to funding my Roth IRA. I’ve also continued building cash reserves for a rainy day. Some individual stocks always look attractive. However, I’d rather be more opportunistic and buy on a broader market pullback.
With the Fed action and all the political funkiness, my gut tells me better opportunity is ahead. Doesn’t mean I’m selling. Just being patient for putting new capital to work.
I still managed to make a few small investments and got in on one IPO.
Here is a summary of investment activity for Q4 2016 including the five stocks I bought and sold:
The addition of $884.54 of working capital in my taxable investment portfolios, plus and minus other portfolio adjustments, puts my forward 12-month investment income (F12MII) headed into 2017 at $7,767.01. That’s $647.25 per month. This was about flat compared to last quarter, and a $539.73 and 7.5% increase year-over-year.
I consider the $7,767.01 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.
The $539.73 number was a little disappointing as the previous year growth was much stronger. But it motivates me to build income more aggressively this year after making some tough choices in 2016.
Here’s a chart tracking my progress as of December 2016:
The brown line in the chart is starting to flatten. This chart is a visual reminder that I need to get more aggressive with putting new cash to work!
Back in April, I spun off a new website that focuses on finding investable initial public offering (IPO) opportunities for ordinary investors. I learned to profit from IPOs so I started a website to teach others.
The announcement that online broker Motif Investing was offering IPO access to its customers has made IPO investing easier for regular investors. After a slow year for IPOs, customers finally got their first chance to invest in IPOs when travel website Trivago (TRVG) entered the public markets.
Since I blog about IPOs, I made sure to participate so I could inspect the new platform. The IPO went off without a hitch and the Motif IPO platform performed seamlessly. I requested a small number of shares and received a fraction of that. So the 10% gain was tiny in dollar terms. But it’s a sign of good things to come. IPO investors are hoping for a much more active 2017.
There’s another IPO expected to take place on the Motif platform at the end of January. Learn more about the upcoming ShiftPixy IPO here.
TD Ameritrade still holds a majority of my stocks. This is where I receive dividends and make most larger trades.
Last quarter I purchased 70 shares of Flowers Foods (FLO). While the company was under the gun for some legal proceedings, the stock took a dip that was disproportionate to the risk. During the price downturn, I acquired shares for under $15. The company has since settled the lawsuit and the stock price has recovered nicely. This purchase added $45 to my forward income.
The second major activity in this account was the spinoff of Quality Care Properties (QCP) from HCP (HCP). HCP is a healthcare REIT that has suffered over the past few years. Spinning off QCP is management’s way of unloading the problem. In the process, management cut the HCP dividend by 35%, kicking this Dividend Aristocrat out of the club.
I sold the QCP stock and have thus far decided to keep my HCP shares for the time being. The stock currently yields 4.75%, and I think it’s better positioned for the future. But if things don’t improve, it may go on the chopping block.
During the past two years, I consistently dollar cost averaged into ten or so different stocks at Loyal3. Due to my debt payoff and the refinancing, I shut off the automatic faucet for the time being.
But I still managed to make one $50 purchase of Disney (DIS) stock in the low $90’s before the break. I still like the stock, and so does Santa. Once I’m comfortable with my cash flow, I may start selectively buying more stocks in my no-fee portfolio.
Loyal3 is the leading IPO platform for ordinary investors. They participated in only one IPO in 2016 (the At Home IPO), but I expect to see more in 2017.
Lastly, I like to end on dividend increases for the quarter. Of the 43 dividend paying stocks in my taxable portfolio, 38 increased their dividend payouts by an average of 7.9%. Three stocks, CSX, GPS and PH kept their dividends flat in 2016.
As I mentioned, the dividend decrease of HCP was disappointing. There was another. The second was due to the YUM Brands (YUM) spinoff of YUM China (YUMC). Investors are hoping for an evening increase once the YUMC dividend is announced.
Below is a list of dividend increases and decreases in my portfolio announced in Q4 2016.
- ABBV 12.3% to 2.56 annual
- ABT 1.9% to 1.06 annual
- BEN 11.1% to 0.80 annual
- CVX 0.9% to 4.32 annual
- DIS 9.9% to 1.56 annual
- EMR 1.1% to 1.92 annual
- HCP -34.5% to 1.48 annual
- NKE 12.5% to 0.72 annual
- T 2.1% to 1.96 annual
- THO 10% to 1.32 annual
- UNP 10% to 2.42 annual
- VFC 13.5% to 1.68 annual
- YUM -34.8 to 1.2 annual
At the time of writing, the author was long all stocks mentioned on this page except QCP and TRVG.