Here it is – my last income update for 2015 that you’ve not been waiting for! Did December’s typically strong performance allow me to beat June’s all-time high income of $1,083 and reach my yearly target? Read on to see…
My total dividend income from my portfolio in December was $1,161, a 7% increase compared to the previous record income from June’s $1,083. In December 2014, I earned $916; this is a more useful comparison showing an increase of 26% over the same time last year.
The following chart shows the cumulative dividend income so far this year compared to previous years.
My total income at this point in the year, $6,792 comfortably beats my year’s target of $5,850! That’s 16% higher if you’re percentage inclined.
I must admit that I’m pretty conservative in setting my targets; I don’t try to chase an arbitrary dollar target since I’d be inclined to chase yield to reach it. instead I project my expected income given my expected contributions and that figure drives my target values.
The chart below shows what contributed to my total income of $1,161 this month.
I received income from individual stocks as well as from all four Vanguard mutual funds.
Dividend income from stocks
24 stocks paid dividends this month as shown below.
The yield calculations are annualized, or extended forward a year based on the current dividend payment against the market value.
Dividend income from funds
My two stock funds paid dividends this quarter which is the main reason for the large boost in income at the end of each quarter; VHDYX (Vanguard High Dividend Yield Index) paid $399 and VTIAX (Vanguard Total International Stock Index) paid $260.
I also received income this month from my two bond funds; $268 from VWEAX (Vanguard High-Yield Corporate Bonds) and $42 from VWESX (Vanguard Long-Term Investment Fund). These pay their distributions monthly and the distributions are taxed as normal income and not the lower qualified dividend rate but their yield is higher.
What I’m not showing in my metrics are the capital gains distributions I received this month. When you hold mutual funds, and in particular actively managed funds, capital gains that the fund receives from the sale of its holdings are passed onto the fund shareholders. The distribution can be a mix of short-term (taxed higher) or long-term (taxed at a lower rate) capital gains. Upcoming distributions are something to watch out for when purchasing a fund since you don’t want to buy a fund and immediately be stuck with a huge tax bill. Some fund funds are “tax-managed” and are structured to avoid capital gains distributions for this reason, but a passive index stock fund is usually fairly tax efficient.
VTIAX and VHDYX typically don’t generate any capital gains taxes ($0 for 2015) but VWEAX and VWESX provided $192.50 and $120.01 respectively in December. I set capital gains to be automatically re-invested back into the corresponding fund and I don’t count the payments as “income”. But in reality my income was about $300 higher than my official numbers.
My Income Portfolio
Here’s an overview of my Portfolio and how it’s made up as of the end of December 2015.
My Portfolio consists of individual dividend stocks as well as 4 Vanguard mutual funds and cash. Compared to November, I bought more VHDYX shares with some of my Cash reserves so the US Stock Fund went up 2% and Cash went down 2%.
The following table shows the detailed asset allocation in my portfolio.
Overall this month my portfolio increased by $516 to $215,011, an increase of 0.24% from last month’s $214,495.
However I added $4,126 in new capital including the capital gains mentioned above and also used some cash reserves to buy more investments. Total purchases were $791 in new shares, $5,550 of VHDYX, $250 of VTIAX, $193 of VWEAX and $120 of VWESX. My stock purchases were 23 shares of QCOM.
Since the overall increase in portfolio value was $516 and I added $4,126 of new capital, this implies my portfolio would have been $210,885 without the additional purchases ($215,011 – $4,126). So overall my portfolio had an underlying decrease of $3,611 or -1.68% had I not made any purchases. As a reference, the S&P was -1.75% for December, the Dow Jones index at -1.66% and the Nasdaq at -1.98%, but those results can’t be compared to mine since the new capital I added changed the total return.
So largely thanks to new purchases than investment growth, my income portfolio is now $40,145 higher than at the start of the year and the dividend income continues to increase.
Quote of the Day
He who has a why to live can bear almost any how.