June 2014 – a record month for dividend income!

I can’t believe it’s the end of June and that we’re halfway through the year already! I’m already excited to report that this month has been my highest month for dividend income since I started this journey two and a half years ago. I even beat the income from last December, usually my strongest month due to additional capital gains from some of the funds I hold.

I received $844 in dividend income this month, which makes a year-to-date total of $2,559 or just over 51% of my target. So I’m on track which is great news! You can see this visually on my goals page.

The Score

Living Expenses $ 3,975
Security Ratio 21 %
Retirement 0
Savings 14 %
Expenses 53 %
Investments 33 %
Wet Worth $ 17,768
Work Freedom Day 20 Nov

Living Expenses – this is essentially how much I pay myself and it includes budget for everything I spend money on, both essential (e.g. groceries, mortgage, insurance), and non-essential (e.g. music, travel).

Of my $3,975 total budget, I actually spent $2,865.88; the remaining $1,109.12 stays in my checking account against purchases I will have in the future such as yearly car insurance payments and my upcoming trip back to the UK.

Security Ratio – this is the percentage of my living expenses that is paid for by dividend income.

21% is an all time high which is fantastic as it usually sits at around 6%. To improve this number I have to either earn more investment income or reduce my living expense budget. In June, I managed both with extra dividend income and my new lower budget.

Savings % – the percentage of my net income spent on savings.

I don’t have high savings goals at present, although included in this category is my car payment which is paying an interest free loan for the next 3 years (1 year down, 3 more to go). I’m usually fighting inflation but with this loan, inflation is working for me.

Retirement % – the percentage of net income spent on retirement.

I don’t cover my retirement accounts (a 401(k) and Roth IRA) in this blog. They’re intentionally boring investments that I leave alone, so nothing to write home about – I follow a boglehead approach for these accounts. They contain several low expense index mutual funds and I pay a total of 16% of my gross income into my 401(k). I’m thinking of doing another back-door Roth IRA contribution this year, but I haven’t done it yet.

Living Expenses % – the percentage of net income that’s spent on living expenses.

This month’s 53% is a substantial improvement over last month’s 68% due to the new budget and higher dividend income this month. My salaried income was a little lower this month as I’ve increased my tax withholding but I’m predicting to owe taxes next year even so.

Investment % – the percentage of net income that I invest.

Any spare money left over after savings, retirement and living expenses are paid goes into my portfolio.

Wet Worth $ – my liquid assets minus all debt, excluding retirement and assets.

My wet worth increased a lot this month, helped by my company paying the remaining expenses from my recent house sale. This month’s figure is a gain of nearly $13,000 from last month.

Work Freedom Day – the day in the year that I’ll have earned enough dividends to pay for the remaining year’s budget.

This month I estimated my Work Freedom Day to be 20th November. That’s only 141 days away!

Dividend Income

June is one of the strongest months for dividend as most companies tend to pay dividends in March, June, September and December. 16 stocks paid dividends this month: MSFT, PFE, XOM, LB, VPU, ROC, INTC, AWR, CVX, HD, JNJ, MCD, UPS, GXP, TAP, MAR as shown below.

The yield calculations are annualized, or extended forward a year based on the current dividend payment against the cost basis or market value respectively.

Last month my dividend stock portfolio was valued at $18,985. This month it’s $20,714 – a gain of $1,728 or 9%. Most of the gain is from new investments though as I added $1,351 in new capital. That leaves a capital gain of $377, or about 2%.

I also hold several mutual funds in my taxable account that I consider part of my dividend income portfolio but buying these is not as interesting as researching stocks. When I first started investing, I felt these were safer than messing with individual stocks, but over time I’m pivoting towards individual stocks.

Fund income was a significantly higher this month since my two stock funds pay their quarterly dividends. Interestingly enough the yield on cost of my stock portfolio and VHDYX are the same.

In total across stocks and funds, my portfolio increased from $132,357 to $137,484; a gain of $5,159 or 3.9%. $4,276 of this gain was new capital, leaving an overall capital gain of $852 or 0.6%

Wet Worth

I’m showing my Wet Worth in this post – this is the cost of my liquid assets minus debt and minus retirement accounts. I prefer this over Net Worth since the equity in large assets (house, car) and retirement funds is hard to get at and not always predictable. I find this is a more honest view of where I’m at on my journey.

Here are the numbers, expenses are coming down and investment percentages are going up! Next month won’t be as good due to lower dividends and slightly lower net income. But the improved cash flow from selling my house in May is showing up finally.

The jump in Wet Worth is caused by

Cash + $8,752 My moving expense refund helped out here
Debt – $1,716 Extra spend on my credit card for auto insurance
Savings + $583 Increase in savings accounts
Emergency Fund + $1 One whole dollar! Part of my EF is a short term fund. It lost value.
Portfolio + $5,152 $852 due to capital gains, the rest new capital
Total + $12,772


Quote of the day

Write to be understood, speak to be heard, read to grow.

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