This report includes income from dividends and my rental properties. However, it doesn’t (yet) include any of the income in tax-deferred accounts (401(k), IRAs, and Roth IRAs), as that income isn’t going to help me retire early. Although I don’t own any now, if I have other sources of passive income in the future (CDs, bonds, etc.) I’ll include them here as well.
Dividend Income
The equity portion of our portfolio is roughly 50% index funds and 50% individual stocks. The mutual funds are from when I started investing. I was much more interested in simplicity and a low time commitment so I could focus my time on my career. As my investing philosophy as evolved over the last few years I converted some of my index funds into individual stocks. However, I’ve owned the index funds long enough that selling them would generate a substantial tax burden. As a result, I’ve decided to hold the index funds and direct all new investment money to my stock portfolio.
Here’s how my portfolio did last month:
| Ticker | Name | September |
| AFL | AFLAC Incorporated | $200.29 |
| BBL | BHP Billiton plc (ADR) | $8.68 |
| BP | BP plc (ADR) | $468.86 |
| CVX | Chevron Corporation | $333.79 |
| COP | ConocoPhillips | $82.07 |
| INTC | Intel Corporation | $64.84 |
| IBM | International Business Machines Corp. | $128.25 |
| JNJ | Johnson & Johnson | $409.42 |
| LMT | Lockheed Martin Corporation | $89.58 |
| MCD | McDonald’s Corporation | $244.30 |
| MSFT | Microsoft Corporation | $57.85 |
| TGT | Target Corporation | $355.13 |
| V | Visa Inc | $109.98 |
| WFC | Wells Fargo & Co | $183.88 |
| VMMXX | Money Market | $42.61 |
| VEMAX | Vanguard Emerging Markets Stock Index Fund Admiral Shares | $994.53 |
| VEUSX | Vanguard European Stock Index Fund Admiral Shares | $405.72 |
| VIMAX | Vanguard Mid-Cap Index Fund Admiral Shares | $963.25 |
| VSMAX | Vanguard Small-Cap Index Fund Admiral Shares | $923.40 |
| Total | $6,066.43 |
A few notes – first, as mentioned above, about 1/2 our investment are in the 4 index funds listed above. Unfortunately, these funds don’t pay out a regular amount of money, nor do they pay on a regular schedule. As a result, I can’t rely on payouts from these sources.
When the index funds DO pay dividends, it’s in the last month of the quarter.
I’m not sure about the rest of you, but the last month of the quarter is always great for me and I look forward to it eagerly. Pulling in over $6k in dividends is pretty awesome. If only that was the result EVERY month, right?
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. We bought these properties in 2012 and 2013 because real estate prices were ridiculous low. I did the math and projected these would be cash cows, and so far that’s proven to be correct.
Note that this number is just the cash flow from the properties (rents minus all expenses, including management fees, mortgage, insurance, repairs, etc.) This number does not include appreciation of the properties or the decrease in the mortgage balance.
Total rental net income = -$1,121.91
This number is not only negative, but quite negative this month due to repairs needed on 2 of the 8 properties. One of the properties needs some roof work done, and one of the properties needed a substantial amount of work done after the tenants moved out (above and beyond what the deposit would cover). That’s the downside of real estate – the income is much lumpier than with dividends or bond interest.
Total passive income
September, 2016 passive income = $4,944.52
Annualized passive income based on last 3 months of income = $ 41,551.56
The first and second month of each quarter are significantly lower than the third month in each quarter, as the third month in the quarter is when my index funds pay their dividends. As a result, I think that looking at the last 3 months of income and annualizing it is the most accurate way to predict income for the next year.
How did everybody else do with their passive income this month?