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 February, 2019. This report includes income from dividends, interest, mutual funds, and rental properties.
Overview
The rain continues here in Santa Barbara. I’ve lived here for 18 years and this is the most rain I remember ever getting! We are 5 years into a drought, so the rain is much needed, but it’s still annoying to not be able to bike to work or play outside with the kids on the weekends. Yes, I know that we are spoiled in Santa Barbara – after all, many parts of the country are experiencing sub-zero temperatures and I’m complaining when it’s 50 degrees and we get .5″ of rain in a day.
Thankfully, even though February was a poor month from a weather perspective it was a solid month for our passive income.
Dividend & Interest Income
Total dividend income for the month was a very solid $3,199.59. As usual for the second month of the quarter, the bulk of our passive income came from a single source – Omega Healthcare Investors.
OHI is a REIT that’s hit a bit of tough patch, but I believe their future is solid. I love the high income, but I hate the concentration risk. As a result, we aren’t selling any of our OHI shares, but we aren’t adding any more funds to it either.
The hope is that as our other investments rise in value, OHI will decline as a percent of our portfolio.
Last February our dividend income was $3,673.91, so our dividend income this month was actually down 12.9% from the same month last year. This is because last year I was holding our cash in a California muni bond fund, and that paid us about $1,000 in interest that month. However, I decided sometime around the middle of last year that wanted to hold our “dry powder” in actual cash, rather than an investment that was subject to interest rate risk. We still have a bit of money in the muni bond fund (resulting in $55.70 in income this month), but it’s minimal.
Outside of the muni bond fund, the rest of our investments paid higher dividends this month compared to last February.
Surprisingly, our dividend income is down slightly (-5%) compared to the dividends received through February, 2018. I’m not too worried about this – as I said, this is due to the muni fund which we no long hold.
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.
February was a bit of a tough month on the rental front. Total rental income was just $598.50. One of our properties needs significant roof work and the total cost should be $3,400. Half was paid this month and the second half will be in March.
The bad news is that means March will be a poor month too, but the good news is that even with the costs we were still cash flow positive on the properties.
Total investment income this month
Total (dividend + rental) income = $3,798.09
This is DOWN 24.14% from our total passive income in February, 2018. Definitely not a good way to start the year but again, I’m not too worried about it. Our rental income is pretty “lumpy” so we routinely see large swings in that income.
Trailing 12-month investment income
Since I only started tracking these numbers in Sept, 2016, I only have actual 12-month totals starting in August, 2017. This graph is doing exactly what I want it to do – it’s trending up and to the right. We’ve had a bit of a hiccup over the last 6 months (due to some rental issues) but I think we are back on the the right track now.
Actual investment income over the last 12 months was $67,843.73. In general this number should continue to rise each month as dividends and rents are increased and new money is put to work. We had 2 negative months with our rental income in the last 12 months – one in March and one in November. As those values fall off the 12 month calculation we should see the number jump quite a bit.
Our peak 12-month passive income was $70,994.47 in the 12 months ending in September, 2018. I think we will easily surpass that number in the next few months.
My goal for 2019 is to have total passive income of $85,000. That would be a huge 23% increase over 2018, but only a 19.7% over our peak 12-month income.
Our goal is eventually have $120k/year in investment income. That should be at or close to the amount we need to live on.
Recap
January was a solid but unspectacular month. Dividend and rental income were both good, and our income streams were well diversified.
Looking back over the last few years, the income in the 3rd month of the quarter is always higher than the previous two months combined and hopefully that trend continues this year.
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?
Do you hold any of the securities in qualified accounts? Or is this an entirely after tax brokerage account play?
We hold mutual funds in our qualified accounts. They typically pay dividends/income in the last month of each quarter. That’s the big reason that the 3rd quarter of each month is typically more than the previous 2 months combined.
Looks like you have a good balance of dividend paying stocks and rental properties. Awesome month of income for you!
Cheers
Thanks – we are trying to have a diversified income stream. In addition to having income from individual stocks, real estate, and mutual funds, I try to keep my income diversified as well. Because the bulk of my salary is through employment in a high-tech company I have very little of our individual investments in high-tech companies.
Love that OHI check you get. Hopefully once all these subsiduaries of them settle things out they will start raising that dividend again. the 5 percent YOY sucks but you have that in cash. Keep it up
Frankly, it’s shocking to me that we are at the point where we are receiving ~$6,800/year in dividends from a single company. And although the dividend has been frozen for about 2 years, I do think it will start being raised again either this year or next. The reality is that OHI acts more as a high-yield bond than a stock, and that’s why I have it.
Being down 5% YOY sucks, but I am quite sure we’ll be back on track in the next few months.