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!)

The second month of the quarter is usually a slight improvement from the first month of the quarter and this was no exception.

This report includes income from dividends, mutual funds, and rental properties.

Here is our investment income for February:

 

Every month I’ve been tweaking (and hopefully improving) the format of my income report. Please let me know if you have any suggestions on how I can make it even better.

Dividend & Interest Income

The bulk of our investment income came from 2 sources – a REIT (OHI) and our intermediate-term California muni fund (which, since I live in California, provides tax-free interest). If you own or have been following OHI you know they’ve had a tough few months. They are a healthcare REIT that specializes in owning and renting skilled healthcare facilities.

While OHI is doing fine, a few of its larger tenants are having issues, and one tenant has fallen behind on rent. As a result, OHI’s stock price has been hammered as investors are concerned about a potential dividend cut at some point in the future. In addition, OHI’s management has announced that they will not raise the dividend this year (thus stopping their streak of raising the dividend by $.01/quarter). I think this is the right decision, and frankly they should have frozen the dividend last year. As I pointed out in a recent post It’s Insanity for Oil Companies to be Raising Dividends, I’m not a fan of a company increasing dividends just to keep a streak alive or try to maintain appearances that everything is fine with the business. I’d much rather the company put the short and long-term health of the company first, then pay out the excess as dividends.

The good news is that OHI’s dividend is still covered by income, so a few more things would need to go wrong for a dividend cut to actually happen. I don’t see a reason to sell. In fact, if OHI wasn’t already an outsized portion of our portfolio I’d be looking at buying more at these prices.

The other major chunk of our dividend income was from our CA muni bond fund. I purchased this a few months ago as a place to park our money while waiting for better deals to become available in the stock market. However, I strongly believe that interest rates will be rising, but unfortunately I don’t have a crystal ball to know WHEN they will be rising. So, to reduce our risk of a loss due to interest rates I’m going to get back out of this fund and keep our money in cash.

 

Total dividend income was $3,673.91. Our dividends were 73.38% of our monthly investment income.

 

Rental income

This category includes net income from the 4 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.

This was a good month for the rental properties. One of the properties will be vacant on March 1st and the tenant paid the last month’s rent in January. As a result, our rental income is down from the average.

Rental income was $1,332.57, which was 26.62% of our monthly income.

 

Total investment income this month

Total (dividend + rental) income = $5,006.48

Our total income for February, 2017 was $3,248.36. That’s a solid 54.1% improvement over last year!

 

Trailing 12-month investment income

Here’s what our trailing 12-month income looks like. Since I only started tracking these numbers in Sept, 2016, I only have actual 12-month totals starting in August, 2017. I’ve annualized numbers before that date (that is, if I had 6-months of income data then I would double it to get a projected 12-month number). In 2016 I only had a few months of data to work with, so small fluctuations would cause my projected 12-month number to jump around. I think this number will start to stabilize now that I have 12 full months of data to use in the calculations. And, in fact, if you look at the graph from August, 2017 to February, 2018 you see a much smoother line that slowly trends up.

 

 

Investment income over the last 12 months = $65,465.44. Note that this is our actual income over the last 12 months, not a projection. I would expect our income over the next 12 months to be higher as new investments are made, dividends and rents are raised, etc. Just putting our cash reserves of $750,000 to work should result in another $22,500/year of income (assuming a 3% dividend).

Our goal is eventually have $120k/year in investment income, so we are 54.6% of the way there!

 

Recap

February, 2018 was a solid month. Our dividend income was good but our rental income was down. Hopefully we can get the unit rented out ASAP so we can start getting rental income from that unit again soon.

I’m already looking forward to next month – the 3rd month of the quarter is always the best

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?