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 | July |
| MO | Altria Group Inc | $336.56 |
| BNS | Bank of Nova Scotia | $143.92 |
| KO | The Coca-Cola Co | $136.49 |
| DE | Deere & Company | $168.86 |
| ITW | Illinois Tool Works Inc. | $109.14 |
| MDT | Medtronic PLC | $147.68 |
| NKE | Nike Inc | $63.68 |
| PM | Philip Morris International Inc. | $263.34 |
| Total | $1,369.67 |
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 = $1,247.65
Total passive income
July, 2016 passive income = $2,617.32
Annualized passive income (assuming no increases in rents or dividends and assuming no investments = $ 31,407.84
The first month of every quarter is always a light quarter from a dividend perspective. As I mentioned in my post about mutual funds vs. stocks, the problem with funds is that the payouts can be erratic. All 4 of my mutual funds have a quarterly payout, but the payouts vary from quarter to quarter, so it’s unlikely that I’ll see a nice consistent quarter over quarter growth in our passive income.
How did everybody else do with their passive income this month?