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 our investment income rise!)
This report includes income from dividends, bonds, mutual funds, and rental properties.
Here is the breakdown of our investment income for November:
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
We continue to suffer from a lack of diversification in our dividend income. We are getting just over 44% of this month’s dividend income from a single company (Omega Healthcare Investors). And while I believe in OHI, I’m also cognizant of the fact that it’s not a smart idea to get too much income from a single source.
My plan to address this when I finally put our cash reserves to work. Right now we are sitting on around $750,00 in cash. I’m waiting until the market is priced a bit more rationally before I invest this money.
The interest income is from our California Muni bond fund and interest on our cash.
Total dividends received were $2,050.52, which was 56.65% 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.
This was a great month for the rental properties. We had one minor repair on one of the properties but otherwise everything ran smoothly.
Total rental income was $1,568.96, which was 43.35% of our monthly income.
Total investment income this month
Total (dividend + rental) income = $3,619.48
Here’s what our monthly numbers have looked like since I started publishing them on my website:
As expected, the graph has a peak at the end of each quarter, when dividend income is at its highest. Rental income has been a bit more stable.
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. Before that date the numbers are annualized (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.
Trailing 12-month investment income
Investment income over the last 12 months = $62,289.88. 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 rent are raised, etc.
Our goal is eventually have $120k/year in investment income, so we are 51.9% of the way there!
I would expect the next 12 months of income to be higher than the last 12 months as dividends are increased, rents are increased, and new money is put to work. Just putting our cash reserves of $750,000 to work should result in another $22,500/year of income (assuming a 3% dividend).
Recap
November was a good month. Our dividend income has been consistent and our rental income was about as high as it can be.
I continue to believe that the market is richly valued and I just don’t see the point of investing new money right now. I have no problem holding significant cash while we wait for more interesting valuations to present themselves.
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?
MoneyCommando,
Out of curiosity what kind of account do you have the cash reserves sitting in? Most high yield savings accounts are giving between 1-1.5% these days, which should equate to ~$750-800/mo in interest. But you’re only getting $23!
Small potatoes in the grand scheme, I know, but it’s gotta irk you as a numbers guy!
I’m also sitting on six figs (in non-retirement accts) waiting for a more reasonably priced market, but struggle with patience and wonder at times if I should just DCA it into the market. What keeps you patient? Have you held out for multiple years in the past for more favorable conditions? (I’m “young” as far as the investment game goes and looking for advice!)
Thanks for the blog and your thoughts!
Yeah, I’ve literally been holding my cash in cash (a sweep fund) earning a fraction of a percent. I’ve recently moved the ~$750k to a Cali muni bond fund, which should result in $900+/month in tax-free income.
As for waiting…yeah, it’s not easy to sit on the sidelines and watch the market go from overpriced to very overpriced. You fear you’re missing out and you want to get in on the action.
What helps me is to look at the S&P during the last 2 meltdowns I was around for – the Dot Com bust and the financial crisis of 2007-2009. Do some quick math on how much money you could have made if you’d invested anywhere near the bottom (it’s obviously impossible to hit the bottom exactly). If you’d invested within 25% of the bottom (a pretty wide range) you would have made a KILLING. I then think about risk/reward. When is there higher risk – when the market has been on a tear for ~8 years and is reaching level of valuation that it’s only reached a few times before in the last century, or when the market’s valuation is below the long-term average?
All you can do is be confident that great investing opportunities will present themselves, and when they do, you want to have enough cash to take advantage.
Hmm, I should look into a muni bond fund for my state. I wonder if as a fund it correlates with greater market swings.
As for patience: thanks. $750k is a lot of cheddar to just sit. I applaud your patience and will try to follow your example!!
Holy dividends Batman. OHI is knocking it out of the park for you. Is that in a retirement account? Keep it up.
Unfortunately OHI is not in a retirement account. It’s a major bummer because an a REIT, all of OHI’s dividends are taxable as regular income.
I continue to think that OHI is priced insanely low. If it wasn’t already a too-large investment I’d buy even more.
if the interest rates go up, wouldn’t the bond prices fall? is it safe to hold the $750k in muni bonds? I am sure you have thought thru this before u made the investment. i am curious, since i have money sitting in American express and Discovery savings accounts earning 1% returns. Wondering the risk vs reward of holding in savings vs the muni bonds
Having the same thoughts.
Yes, if interest rates go up then bond prices would fall. That is why I’ve invested in short-term and intermediate term bonds.
However, the whole point of keeping money in cash/bonds is that I strongly believe that the stock market is significantly overvalued. When the inevitable correction happens there is (as there has always been during market corrections) a flight to quality and stability. When stock prices drop, investors will sell stocks and buy bonds. This will drive up the prices of bonds at the time I’m looking to sell bonds and buy stocks.
So, yes, there is some interest rate risk in buying munis vs. just holding cash. However, it’s a calculated risk that I believe will pay off.
Yup, that makes good sense. When panic sets in people don’t care how low the bond yields are, they would all rush to buy them.
Yup – that’s the thinking