DGI Adventure 07-03-2017 Month in Review – June 2017

Well the first half of the year is officially in the books.

Unlike the last two months, I actually did publish a couple posts this month. Not very many though. It was another pretty quiet month.

I’m going to get active on the twitter. Follow me there for trade updates. I’m not going to post every single trade here any more. I will still do a write up on the blog if it’s a new position or for some other reason that warrants an investment thesis. For now the blog still lives on the tumblr, but it won’t be that way forever. I’m looking to move to a better platform soon. I’ll try to make it as seamless as possible for all six of you who follow.

Anyway here’s what happened in June.

Portfolio Summary

Stock Purchases

5 stocks purchased. 3 are new positions, 2 are additions to existing positions; projected annual income increased by $384.00 based on current dividends.

06/02/17 – VLO: 100 shares purchased @ $64/share. This was the result of an option assignment. I sold the contract on 5/11/17, but didn’t do a blog post about it because I’m a horrible person. That’s why I’m documenting all my trades on the twiiter from here on out. I already owned 25 shares of VLO in my ROTH IRA at $67/share, so I’m averaging down with this purchase.

Annual projected income is increased by $292.00/year based on the projected annual dividend of $2.92/share.

06/02/17 – GPS: 100 shares purchased @ $23.00/share. This was also the result of an option assignment. I sold the contract on the same day as the VLO contract discussed above. I already owned 56 shares of GPS in my ROTH IRA at ~$22.52/share, so this is a position increase at more or less the same cost basis.

Annual projected income is increased by $92.00/year based on the projected annual dividend of $0.92/share.

06/30/17 – BND: 106 shares purchased @ $82.0494339/share. This is the “bonds” component of my Lazy Portfolio Experiment. Since I will be automatically (rather than selectively) reinvesting these dividends, I don’t count this income towards my projected annual investment income. That’s just how I do it. Get over it.

06/30/17 – VTI: 139 shares purchased @ $125.3870943/share. This is the “US equities” component of my Lazy Portfolio Experiment. Since I will be automatically (rather than selectively) reinvesting these dividends, I don’t count this income towards my projected annual investment income. That’s just how I do it. Get over it.

06/30/17 – VXUS: 244 shares purchased @ $52.375/share. This is the “International equities” component of my Lazy Portfolio Experiment. Since I will be automatically (rather than selectively) reinvesting these dividends, I don’t count this income towards my projected annual investment income. That’s just how I do it. Get over it.

Choose the Form of the Destructor

I didn’t initiate any new UVXY positions, although Thursday 6/29/17 might have been one of the better opportunities in a while. I missed it though.

I’m not giving up on this crowded trade quite yet, but I am being extremely selective about entry points.

All UVXY put trades are documented in the “UVXY” tab of the Dividend Income Tracker, and future trades will also be documented on the twitter.

For the uninitiated, I am shorting UVXY because it is the worst ETF ever. I use long put positions so I can avoid the use of margin and do these trades in tax-advantaged accounts.

Additional exploits can be found here, here and here.

Pay Days and Raises

Dividend Income Tracker is published back at the mothership and has been updated.

Total investment income of $1,234.91 with a taxable total of $6.93. We’ll call it 12 “pay days” with 28 individual payments received.

  • Options premiums represent $48.12 of that total.
  • Capital gains made up $716.66.
  • Which leaves $463.20 of actual bona fide dividends (and $6.93 of P2P lending interest).

Last month I said, “That’s probably my lowest options total in a long time. I told you it was a quiet month!”

Considering what June was like last year, I wouldn’t have expected to follow up May with even less options activity, but here we are.

Lending club income is aggregated into a single income record for simplicity’s sake. It actually arrives as a lot of small payments over the course of the month. One loan was charged off this month, although my net income was still *barely” positive in spite of that loss. That brings the number of bad loans we’ve invested in to a total of 5 out of 166 or ~3%.

We went from 5 “late” loans last month to only 3.  Since only one of those was charged off, at least one got caught up, which I guess is good news, but it was replaced by another in the grace period.

There is still trouble brewing, and like I mentioned last month, July could get ugly.

This should be fun to track. This table will grow with each monthly update.

Lending club’s algorithm is suggesting I should write down $50.36 worth of principal for the loans that are late or in the grace period, but as the eternal optimist, I’m going to continue to wait until the loans are actually charged off to recognize the loss.

That is down from what it suggested last month ($67.97), but it represents nearly the full amount of principal currently in the 31-120 days late category, so I guess I shouldn’t hold my breath on those.

Comparisons

Month over month, investment income was down slightly by -6.2% from $1,316.75 in May, but year over year it is up 4.0% from $1,187.35 in June of ‘16.

May of 2016 is when I took my leap of faith and moved my inherited IRA over to Interactive brokers. So this is really the first YoY comparison that reflects the same options boosting dividends strategy. It would be nice to see a bigger jump, but hey I’ll take it.

Raises

One of the dividend distributions received represented a raise:

JNJ paid $0.84/share compared to $0.80/share in the previous quarter. That represents a 5.0% increase. I would argue that is a little disappointing from this dividend champion. The share price has appreciated quite a bit since my wife made this investment in February of this year. The forward yield is pushing down to the 2.5% range, which means either Mr. Market is pricing in bigger than 5% increases, or using a different future discount mechanism.

So there we have it. Bring on the second half!

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