May 2018 Income Fund Update

May 2018 income fund update report graphicHere’s my May 2018 Income Fund update, following on from last month’s April update. I made a large stock purchase this month which is not typical. Click on for the details…

Dividend Income

Total income from my Income Fund this month was $101, a 75% decrease compared to the $418 I received in May 2017.

The following chart shows the cumulative dividend income this year compared to previous years.

Total dividends received so far this year are $2,826 compared to $3,342 last year.

The cumulative month on month decline continued when compared to last year. This time last year I held high-yield bonds which paid monthly distributions. In September I exchanged these for stock funds which pay quarterly at a lower yield so this decline is expected. On the plus side, I won’t be paying as much in taxes.

Overall I’m relying more on added capital than dividend yield this year to try to reach my 2018 Target of $13,760. But it’s not looking that great to reach my target at the end of the year.

Income breakdown

The chart below shows a breakdown of my income this month.

The largest contribution came from individual stocks paying $98.

Interest from the Income Fund cash reserves made up the remaining $2. I keep a little cash aside to smooth out ‘withdrawals’ and the interest rate on this money market account has increased a little.

Dividend income from stocks

Six stocks that I hold paid dividends this month for a total of $98 as detailed below.

Last May my individual stocks paid $99.13 from nine stocks. Since then I’ve sold my shares of CLX and VZ. This month would have been an increase despite the sales, but last year UPS paid a dividend this month. This year the dividend is paid in June.

Dividends increased by a simple average of 5% over last year all on their own. AXP and RTN had the biggest increase with 9.4% and 8.8% respectively. T increased the lowest at 1% with GIS not far behind.

Income from funds

None of the stock funds that I hold paid out dividends this month.

Asset Allocation

My Income Fund asset allocation is shown below.

I hold 100% stocks in my Income Fund which is held entirely in Taxable accounts.

Cash is virtually zero as I just keep a small amount to manage cash-flow.

Detailed Allocation

The following table shows the details.

Individual stocks are a little over my target. International stocks are a little under. Not enough to worry about however.

Fund Purchases & Sales

I added $2,870 of new money to my Income Fund in May.

Fund purchases

Total purchases this month were $100 in VTIAX. Most of the new money went towards individual stocks.

Funds sold


Stock purchases

I bought 85 shares of T in May. Total cost including the $2 commission was $2,742.83. It’ll be interesting to see how AT&T fares with its recent acquisition of Time Warner.

This purchase compensates for the 84.15 shares I sold pretty much at cost last month to get rid of fractional shares. The transaction worked out positively since I sold the shares for $2,976.95 and spent $200 less to buy back more shares.

Stock Sales

None. I’m all done with selling shares and all my holdings are now consolidated in one brokerage.


I transferred $875 from Fund Cash into my Living Expense account. This is an automatic payment and represents about 21% of my Living Expenses that my Fund pays every month.

Money is fungible, so a dollar in one account is no different than a dollar in another account (although an argument can be made that tax-deferred money is different). The distribution from the income fund allows me to invest more of my salary than I otherwise would be able to. Withdrawing money gives me experience in managing cash-flow from the Income Fund because one day I won’t have a salary.

Fund Cash

Fund Cash is now at $1,410 and held in the VMFXX money market account which is where all dividend distributions are paid into. $1,135 of this amount is reserved for future distributions of $875 a month. $275 is spare and not yet invested.

Cash has decreased by $753 since last month as I spend down my three month withdrawal buffer. It will be re-filled next month with June’s dividend income.

Portfolio Performance

My Income Fund increased in value from $434,917 to $439,891 this month. This increase of $4,974 includes $2,870 from new capital so there was a $2,104 of capital growth.

Retirement Accounts

Although most of the financial information I describe is about my Income Fund, I should point out that I consider this one piece of the bigger picture. Ideally I’d like to reach Financial Independence based solely on my taxable accounts which is 100% stocks, but I still have Retirement accounts in case I can’t.

When I combine both accounts, I’m at a 63:18:19 asset allocation to US stocks : International stocks : US bonds. My retirement accounts are about the same size as my Income Fund with a higher bond allocation. This isn’t far off from my 60:20:20 target.

I max out my 401(k) contributions to reach the full $18,500 amount this year.


I’ll be looking to buy more international stocks next month as they’re currently under my target.


So it’s been another quiet month in dividend land. June numbers will be much more interesting when the funds pay their distributions.

How was your latest month? Are you one step closer to Financial Independence?

Quote of the Day

Knowledge will give you power, but character respect.

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