Month in Review – December 2017

Well that went by fast.

It seems like just yesterday I was writing up my summary for December of 2016 and yet here we are at the end of another year.

The stock market gave us a record performance this year, and I see lots of folks in the personal finance and investing blogospheres patting themselves on the back for how much they’ve grown their net worth or portfolio.

Our own “wet worth” (liquid assets only) has reached unprecedented levels the last three months in a row, and I must admit it’s really hard not to get excited by the big number. It’s also really hard not to take credit for the performance.

Lest we confuse a bull market with brains, I will continue to try to focus on the predictable income stream being built rather than the high score being set. When the next correction comes, the high scores will drop, but the income will hopefully continue to steadily plod along.

So December is over, and it’s time to turn over a new slate to 2018. But before we do that, let’s look at 2017’s final month.

Portfolio Summary

Metric

End of December 2017

End of November 2017

Total Invested

$414,537.39

$402,355.52

Market Value of Total Invested

$450,007.22

$430,437.85

Allocation % – Equity

54.25%

55.81%

Allocation % – Bonds

17.06%

15.80%

Allocation % – “Other”

3.14%

3.32%

Allocation % – Cash

25.13%

24.62%

Income Assets – Invested

$245,778.27

$244,869.00

Income Assets – Market Value

$258,308.06

$253,760.97

Projected Annual Income

$12,172.17

$13,050.37

Invested Yield

4.95%

5.33%

Market Yield

4.71%

5.14%

Stock Purchases

4 stocks purchased. 3 are additions to existing positions, and 1 is new; projected annual income increased by roughly $571.20 based on current dividends.

12/06/17 – VCF: 108.1634 shares purchased @ $15.37/share. I mentioned last month that I was beginning to build a position in this muni-bond closed end fund in our taxable account.

I have the sharebuilder auto-invest feature set up to buy $1,666 worth of shares once per month. The account is funded with 8 months worth of cash for these auto-investments, so get used to seeing this one here.

Since the dividends are set to be automatically reinvested, I don’t count this investment towards my total projected investment income.

12/15/17 – PIM: 800 shares purchased @ $4.68/share. This is part of the ongoing construction of my CEF portfolio. I’m getting closer and closer to eventually having a full position in the different CEFs I’ve chosen. Projected investment income increased by $249.60 based on the current distribution of $0.312/share/year

12/22/17 – CIK: 1,000 shares purchased @ $3.3044/share. This purchase is also part of building the CEF portfolio. This brings me to my full target position for CIK.

Projected investment income increased by $264.00 based on the current annual dividend distribution of $0.264/share/year.

12/26/17 XEL: 40 shares purchased @ $48.17375/share. This is a new position in my ROTH IRA. Until this investment we haven’t owned any individual utilities. I’m not too keen to own many more. This kind of checks a box that I’m not even sure needed to be checked but oh well.

Projected dividend income increased by $57.60 based on the current annual dividend of $1.44/share. That is just about the equivalent of one month’s worth of our energy bill, so there’s that.

Choose the Form of the Destructor

Last month, I was under the impression that my UVXY trading might have been finished since Interactive Brokers changed their rules about special MLPs in retirement accounts.

That hadn’t been confirmed though, so this month I tried to buy a couple LEAPS puts with a $9.00 strike, and it worked!

So evidently buying puts is okay. I guess that takes away a little bit of flexibility in the sense I can’t just hold on to these and exercise them once they go past the breakeven point? That’s never really been part of my fundamental strategy anyway, although I guess it used to be an option. Oh well.

All UVXY put trades are documented in the “UVXY” tab of the Dividend Income Tracker, and any 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. I am very glad that I can continue to make this trade in the beneficiary IRA.

Pay Days

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

Total investment income of $1,170.39 with a taxable total of $32.07. We’ll call it 12 “pay days” with 40 individual payments received.

Options premiums represent $464.73 of that total.

Capital gains made up $48.35.

Which leaves $625.23 of actual bona fide dividends (and $32.07 of P2P lending interest).

Lending Club

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.

No loans were charged off this month. Yay! The number of bad loans we’ve invested in is 8 out of 203 or ~3.94%.

Month over month, it looks like a couple loans that had been in  trouble became current. At the end of November we had 2 in the grace period and 6 that were extremely late (31-120 days). At the end of this month, there are still 6 that are extremely late, but none in the grace period or 16-30 days late.

So that’s nice.

Month

In Grace Period

Late (16 -30 days)

Late (31 – 120 days)

Charged Off (aggregate)

January 2017

1

1

4

1

February 2017

4

0

2

2

March 2017

2

0

2

2

April 2017

1

0

2

4

May 2017

0

2

3

4

June 2017

1

0

3

5

July 2017

1

1

2

6

August 2017

1

1

2

7

September 2017

4

0

4

7

October 2017

4

1

3

8

November 2017

2

0

6

8

December 2017

0

0

6

8

I’m glad I started tracking this stuff this year. I think this table is fascinating.

Lending club’s algorithm is suggesting I should write down $89.48 worth of principal for the six loans that are late, 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 ($100.48), which evidently reflects the two loans that recovered.

I started a new experiment buying late notes on the secondary market at a discount. I’m still figuring out the details of that strategy. For now I am keeping all that separate from these monthly summaries. I have some income and some losses, depending on how you want to look at it, (although overall it’s not doing great so far.) It is going to remain a separate deal for the time being.

Here’s the latest on all that.

Comparisons

Month over month, investment income was up 6.4% compared to $1,099.72 in November. My investing income bounces around a lot from month to month. My dividends are actually relatively stable thanks to all the CEFs that pay monthly, but the options income and capital gains are pretty sporadic. That’s what I get for counting it this way I guess.

I now have 4 years (!) of data on my income tracking sheet.

So I’m including a table in this segment to look at longer term trends:

DECEMBER – INVESTMENT INCOME HISTORY

Year

Dividends

Options

Capital Gains

P2P

Total

2014

$57.16

$0.00

$0.00

$0.00

$57.16

2015

$413.27

$0.00

$0.00

$0.00

$413.27

2016

$445.29

$205.08

$1,317.45

$3.07

$1,970.89

2017

$625.23

$464.73

$48.35

$32.07

$1,170.39

Pretty cool huh?

Raises

SBUX handed shareholders a 20% raise with this quarter’s dividend distribution, which is exactly the kind of dividend growth I want to see in my lower yield investments.

When I first initiated a position back in June of 2016, SBUX had a sub 2% yield. The company has since raised the dividend by $0.05 twice (which represent 25% and 20% increases).

Yet the share price hasn’t really appreciated that much, so the yield has climbed significantly thanks to the raises. The balance sheet and cash flow remain very strong, so I don’t expect the dividend growth to stop any time soon. At some point Mr. Market is going to catch on and the share price is going to appreciate. It might be time to pick up some more shares here shortly.

So that’s the month that was. What do you think? How was your month? Think I’m crazy? Want to shout anonymously on the internet? The comments section is waiting for you.

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