Investment Income Update For Q1 2016
The investment income page on my blog has been updated as of the 31st of March 2016. This page outlines my portfolio of taxable investments and the income they generate on a yearly and average monthly basis.
Click here to access all previous monthly income updates.
If you’re a first-time reader of this update, I track my 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 * – super-cool investment analytics, automated net worth calculator, fee analyzer etc.), but for me, sharing investment income 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 has 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.
The Move to Quarterly Updates
From the beginning of this blog until the end of 2015, I publicly tracked my investment income on a monthly basis. Doing so helped motivate me to invest aggressively, increasing my forward 12-month investment income (F12MII) from $3,681.15 to $7,227.28 at years end. That’s almost double in 26 months!
However, for 2016 I decided to cut back my investment income updates to quarterly. I’m still tracking monthly with my own spreadsheets. But I’m only posting quarterly updates this year for a few reasons:
- Analytics started showing that these posts were not as popular as others. So cutting back is, in part, a response to reader interest.
- Month-to-month, my strategy doesn’t change that much. Monthly updates were becoming somewhat repetitive.
- I can still indicate what purchases I make each month on the investment income and portfolio page.
- Writing about subjects that motivate, help, and inspire others is a better service to my audience.
- I wanted to open up time for other things, including new potential side hustles.
Reporting quarterly still shares the details of my financial maneuvers, but does so more efficiently, opening up time for creating more unique content.
Investment Income Received In Q1 2016
The S&P 500 index settled at 2059.74 on March 31st, up 0.77% in the first quarter of 2016. That was after a wild downward ride down to 1810.10 in February.
Here are the numbers for investment income received in Q1 2016:
|Income Stream||January||February||March||Q1 Total|
|Interest on Cash||$9.17||$9.20||$10.08||$28.45|
Compared to Q1 2015, my total investment income received grew from $1180.24 to 1,752.27, up 48.5%.
Summary of Investment Activity for Q1 2016
After setting some less aggressive goals for 2015, I still put a decent amount of money to work. The first chunk went to Mrs. RBD’s Roth IRA, which I never got around to funding last year. That contribution took up a big piece of the pie for Q1, leaving $5,500 less for building taxable F12MII.
That chunk, combined with increasing our cash savings buffer, didn’t leave a lot of funds to buy big lot purchases. And as I do on a regular basis, I still added money to a few DRIPs and continued to dollar cost average into stocks at Loyal3. That’s all after maxing out 401k savings and the $900 per year invested in my kids’ college savings accounts (not accounted for below).
Dividend increases have been moved to the end of the post.
By adding a net of $3,775.90 in new working capital to my taxable investment portfolios, my forward 12-month investment income (F12MII) increased to $7,568.14 or $630.68 per month. This was a $340.86 and 4.72% increase over last quarter, and a $2,001.55 and 36.0% increase year-over-year. I consider the $7,568.14 in F12MII the most important number because it represents an estimated amount of money I would receive via investment income if I stopped working today.
Here’s a chart tracking my progress as of March 2016:
Aside from ingesting tasty dividends in my TD Ameritrade account, I made three purchases and one stock sale.
Starting with the sale, I sold 50 shares of the electricity transmission company ITC Holdings (ITC). This was mostly due to the announcement on February 9th, that Fortis Inc. would be acquiring ITC. I didn’t sell right away on the news. However, at some point, I determined this holding to be played out and went ahead and sold it instead of doing the research on Fortis. Some of the sale proceeds were not invested this quarter, giving me a head start on Q2.
Next, I opened a small position in the railroad company Union Pacific (UNP). I already owned shares of CSX, but like the simplicity and wide moat protection of the railroad industry. I watched the stock fall so far over many months. Below $75 it became too appetizing.
Then I added 10 shares to my existing shares of IBM. IBM dropped below $130 in January, and even as low as $117 the next month. Though not a perfect company or stock, I bought the shares as I think the dividend is safe and can grow at a healthy rate. I interact with IBM in my career and I’m constantly reminded of the solid long-term contracts they hold. IBM computers are everywhere. Services are everywhere. The cloud business gets a lot of attention, but the safety is in the legacy computing and software contracts they hold.
Lastly, I added another 30 shares to my Archer-Daniels-Midland (ADM) holdings. I bought 30 shares back in December. Since then, ADM has consistently been at or near the top of my Dividend Aristocrats Rankings.
TD Ameritrade remains my most active brokerage account. I’m considering transferring more DRIPs into that account to more effectively pool dividends and to simplify holdings. I as I wrote in a recent guest post,
I currently own 22 stocks through one motif that I created and own through Motif Investing. A motif is a group of stocks that you select and purchase for one low fee ($9.95). It’s kind of like creating your own ETF of up to 30 stocks.
The expected forward dividends for my account is currently $16.73. I’m tracking this number in my own spreadsheet as one holding because each equity position is quite small. I spent about $1,000 to buy a small position in all the stocks. Motif Investing is a way to get broad coverage in one trend, idea or industry. You can also buy individual stocks for $4.95 per trade.
While I like the platform for creating motifs and buying stocks, portfolio dividend information isn’t readily available on the site. That’s the only drawback I’ve seen in this platform so far.
What I’m really excited about is the opportunity to invest in IPOs on the Motif Investing platform. The company announced that individual investors will be able to participate in upcoming IPOs. We haven’t seen the first one yet, but I’m keeping close tabs on this development. Click the banner below to learn more (and check out the new logo when you get to the site).
One major failure in 2015 was forgetting to invest in Mrs. RBD’s Roth IRA at Fidelity. Well I fixed that issue this past quarter depositing the full $5,500 allowed by law. This amount applied to 2015, so I can still add to hers and my Roths in 2016.
Even though I’m primarily a dividend growth investor in my taxable accounts, I’m mostly an index investor in our retirement accounts. Our retirement accounts are set-it-and-forget-it as much as possible. So I invested her money in a Fidelity Spartan total market index fund. This fund owns a piece of just about every stock in the US. The money grows in that fund and reinvests itself, costs me nothing to buy, and the annual expense ratio is quite low.
I only use our Fidelity accounts for retirement at this point. I had a taxable account from the Lending Club IPO, but have since transferred those funds to TD Ameritrade. I’m exploring adding more funds to the account to gain access to more IPOs.
The embedded Google spreadsheet was getting a bit too large in the monthly posts. Now that I’ve gone to quarterly updates, dividend increases will be more voluminous. So I’ve save them for the end. The following nine stocks, out of 43 dividend paying taxable holdings, increased their dividends in the first quarter of 2016. The average increase was 6.4%.
- ADM 7.10% to 1.20 annual
- GIS 4.50% to 1.84 annual
- HAS 10.90% to 2.04 annual
- HCP 1.60% to 2.30 annual
- KO 6.10% to 1.40 annual
- KSS 11.10% to 2.00 annual
- MMM 8.30% to 4.44 annual
- O 4.20% to 2.39 annual
- TROW 4.00% to 2.16 annual
Thanks for reading, commenting and sharing on your socials. Please let me know what you think about switching to quarterly updates.
* Oh, and about Personal Capital… I wanted to add that I used to manually calculate my net worth every single month. I did so for 12+ years, all the way back to October 2013. Though time consuming, I enjoyed updating the spreadsheets. Well now, I can check the Personal Capital app on my iPhone and get a real-time view of my net worth, including all my investments, real estate, bank accounts, Lending Club… everything. I totally cut out my own spreadsheet updates because it was redundant. This saves me about 2 hours a month in productivity.
Personal Capital also has an investment portfolio analyzer, as well as a retirement planning feature and mutual fund fee analyzer among many other features. Anyways, I was skeptical before I started using it. Now I’m a huge fan. If you’re interested in checking it out, click the banner below. It’s free.
Disclosure: Long all stocks mentioned in this post.
10 Stocks I Bought In Q2 2016
The Portfolio page on my blog has been updated as of June 30th, 2016 with the latest 10 stocks I’ve recently bought. 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.
If you’re a first-time reader, 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.
Re-branding the Quarterly Updates
Since October of 2013, I’ve tracked my portfolio and investment income under the post titles Investment Income Updates. That title, while accurate, is rather mundane. Here on the internet, a catchy title is everything. So I decided to spice it up a little bit to lure in new readers (Welcome! – Start Here).
10 Stocks I Bought Last Quarter is more enticing. Readers like numbered lists and want to peek into portfolios. So I’ll be going with this title until I change shit up again.
The newly branded quarterly post will still contain the usual calculation of forward 12-month investment income (F12MII), which includes income from peer lending, dividend stocks, interest on cash and rental property income. I’ll also point out recent dividend increases from my portfolio, and whatever 10 stocks or ETFs I actually do buy.
Before I disclose the 10 stocks ** I bought this past quarter, let’s check out the investment income I received.
Investment Income Received In Q2 2016
The S&P 500 index settled at 2,098.86 on June 30th, up 1.90% for the second quarter of 2016. Year-to-date, the index is up 2.69%.
Here are the numbers for investment income received in Q2 2016:
|Income Stream||April||May||June||Q2 Total||YTD|
|Interest on Cash||$12.56||$12.60||$12.06||$28.45||$65.67|
Compared to Q2 2015, my total investment income received grew from $1469.49 to 1,980.45, up 34.8%. June was a near record month, bringing in $816.95 in combine passive income. Now if I can just get spending down to that level, I won’t need this stinkin’ job.
One notable decrease was to the monthly rental income. Taxes went up starting in May, so annual forward income went down by about $91. Thankfully, I recently raised the rent.
Summary of Investment Activity for Q2 2016
Q2 was somewhat slow for putting new taxable funds to work. More activity took place in retirement accounts, specifically, those in Mrs. RBD’s name (I’ll elaborate further on).
The slowdown was mostly due to stagnated cash flow that wasn’t addressed until recently. I’ve made some changes and hope to be able to invest more funds before a big pre-school tuition increase hits in September.
After 20 years of DRIP investing, I’ve stopped adding money to DRIP accounts entirely. Further validating that decision was the news from Procter & Gamble that the company switched transfer agents and increased fees. I’ve already initiated a transfer of shares to my TD Ameritrade account. I’m planning to do the same for most of the other DRIPs including Chevron (CVX), Coca-Cola (KO), and Emerson Electric (EMR).
Here is a summary of investment activity for Q2 2016:
By adding $2,582.00 in new working capital to my taxable investment portfolios, my forward 12-month investment income (F12MII) increased to $7,690.02 or $640.83 per month. This was a $121.88 and 1.61% increase over last quarter, and a $1,655.56 and 27.4% increase year-over-year. I consider the $7,690.02 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 June 2016:
My wife’s IRA accounts at Fidelity experienced some changes this month. These accounts aren’t included in my F12MII calculation because they are tax deferred.
On occasion, I dabble in growth stocks in these accounts as opposed to pure dividend growth stocks. In that light, I decided to sell a few blue chips that I already owned in my taxable accounts in favor of two promising non-dividend payers.
The two sales were Procter & Gamble (PG) and Johnson & Johnson (JNJ). I bought these for my wife when the values looked good in 2014 and 2015. Each stock was well in the green so I sold them both in her IRAs while holding onto them in my taxable accounts.
In exchange, I bought three new holdings. The first is the SPDR S&P Retail ETF (XRT). This is a sector ETF focusing on retail. The sector as a whole has been punished because investors believe Amazon (AMZN) is taking over the world and earnings haven’t been all that stellar. This ETF was suffering on May 23rd so I stepped in and opened a position. Amazon is still the top holding in the ETF at about 1.5%.
The next new holding is Chipotle (CMG). This is a strong growth company that’s fallen on hard times due to some food quality issues. Our family is a huge fan of Chipotle. So I used the opportunity to buy 5 shares at around $450. Now that it’s fallen even more, I’m considering adding more.
Chipotle is a long-term growth play with many good years ahead of it. The recent price decline may be a good chance to own a great company that is completely debt free.
Lastly, we opened a position in Twitter (TWTR). This is another company I frequently use and have always considered an excellent internet property. Fortunately, I bought the stock before the LinkedIn news and have seen solid price appreciation.
Most of our tax advantaged investing remains in index funds and ETFs. However, by selling stocks I own elsewhere and buying two promising growth stocks, we’ve diversified our big picture of investments and added some potential long-term appreciation.
The bulk of my taxable holdings is in a TD Ameritrade account. I’ve invested with the brokerage for more than 15 years.
During the quarter I received a nice chunk of dividends but only added to one stock position. That stock is Abbott Laboratories (ABT). I’ve owned Abbott since November 2010, prior to the Abbvie (ABBV) spin-off. But I’ve only owned 80 shares and have wanted to round that off at a square 100. So I bought the last 20 shares at $39.10 on June 3rd. This purchase increases my cost basis from $23 to about $26.
Dollar cost averaging into great companies at Loyal3 is still a core strategy. Right now I’m buying at least $50 worth of six stocks each month. They are Berkshire Hathaway (BRK-B), Disney (DIS), Hasbro (HAS), Kohl’s (KSS), Nike (NKE), and VF Corp (VFC).
To take advantage of the fear surrounding retail stocks, I threw an extra $100 at both Kohl’s and The Gap (GPS) yielding near 5%. Neither is performing well on a quarterly basis. The Gap has a solid balance sheet and I believe will weather this storm and reverse the negative comp sales.
Kohl’s, on the other hand, has a riskier debt position and higher dividend payout ratio. I’ll be keeping a close watch to make sure things don’t go further south.
Dividend Increases from 10 Stocks
Below is a list of dividend increases from my portfolio announced in Q2. The highlight is the long-awaited Bank of America (BAC) dividend increase of 50% that was allowed after the recent stress test. Long ago I anticipated strong dividend growth. The company is finally entering what long-term shareholders hope to be a new era of dividend growth.
19 out of 43 dividend paying stocks in my portfolio have increased the payout year-to-date. The average increase for this quarter was 9.53%.
- AAPL 9.6% to 2.28 annual
- BAC 50.0% to 0.30 annual
- CLX 3.9% to 3.2 annual
- DCI 2.9% to 0.70 annual
- HP 1.8% to 2.80 annual
- IBM 7.7% to 5.60 annual
- JNJ 6.7% to 3.20 annual
- PG 0.6% to 2.678 annual
- TGT 7.1% to 2.40 annual
- UL 5.0% to 1.46 annual
Thanks for reading, commenting and sharing on your socials. Please let me know what you think about switching to quarterly updates.
* And about Personal Capital… I used to manually calculate my net worth every single month. I did so for 12+ years, all the way back to October 2013. Though time-consuming, I enjoyed updating the spreadsheets. Well now, I can check the Personal Capital app on my iPhone and get a real-time view of my net worth, including all my investments, real estate, bank accounts, Lending Club… everything. I totally cut out my own spreadsheet updates because it was redundant. This saves me about 2 hours a month in productivity.
Personal Capital also has an investment portfolio analyzer, as well as a retirement planning feature and mutual fund fee analyzer among many other features. Anyways, I was skeptical before I started using it. Now I’m a huge fan. Click the banner below to give it a try. It’s free. Here’s a comprehensive Personal Capital review if you’re interested in learning more.
** 10 stocks give or take a few
Disclosure: The author is long all stocks mentioned in this article except AMZN.
9 Stocks I Bought (And Sold) In Q3 2016
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.
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.
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.
5 Stocks I Bought (And Sold) in Q4 2016
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.
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. It’s a great place to find related content written by my peers in the personal finance and investing worlds.
NEW: Also check out the Dads Blog Money page. Click that link or get there from the main menu. This is a group board I maintain on Pinterest embedded it on my site using an API. Contributors to the board are Dad bloggers writing about money. Worth a look for more great content.
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.
IPO investing is not for everyone. If you’re interested in learning how to invest in IPOs, check out Access IPOs. You can also learn more at Motif Investing.
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.