Month in Review – January 2018

So that quickly the first month of 2018 is over and done with. At the very end, we saw just a glimmer of volatility in the markets, but nothing that put too major of a dent in this incredible run we’ve seen over the last several months.

I for one would welcome some more of that volatility, but maybe I’m alone in that.

The wet worth tracker continues to shoot up and to the right:

So here we go. Let’s dig in to January shall we?

Portfolio Summary

Metric

End of January 2018

End of December 2017

Total Invested

$466,901.23

$414,537.39

Market Value of Total Invested

$428,138.10

$450,007.22

Allocation % – Equity

55.15%

54.25%

Allocation % – Bonds

18.03%

17.06%

Allocation % – “Other”

2.76%

3.14%

Allocation % – Cash

23.60%

25.13%

Income Assets – Invested

$254,491.93

$245,778.27

Income Assets – Market Value

$265,714.84

$258,308.06

Projected Annual Income

$12,612.23

$12,172.17

Invested Yield

4.96%

4.95%

Market Yield

4.75%

4.71%

Stock Purchases

4 stocks purchased. 3 are additions to existing positions, and 1 is new; projected annual income increased by roughly $283.88 based on current dividends.

01/06/18 – VCF: 108.775 shares purchased @ $15.28/share. I’m continuing 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 7 more months worth of cash for these auto-investments, so this will be here for a while.

I’m dollar cost averaging into the position because I expect negative pricing pressure on bonds this year as rates rise and inflation picks up.

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

01/17/18 – FAST: 41 shares purchased @ $53.75/share (not including $6.95 trade commission). I bought these shares in my ROTH IRA, deploying the last bit of cash in that account. I’m going to call this a new position, because we didn’t have any shares in the portfolio. Once upon a time I used to own FAST though, so really this is just re-establishing a position.

Projected investment income is increased by $60.68/share based on the newly increased annual dividend of $1.48/share.

01/19/18 – PPT: 400 shares purchased @ $5.265/share. This purchase is part of building the CEF portfolio.

Projected investment income increased by $124.80 based on the current annual dividend distribution of $0.312/share/year.

01/26/18 EGF: 200 shares purchased @ $13.255/share. This purchase is also part of building the CEF portfolio.

Projected dividend income increased by $98.40 based on the current annual dividend of $0.492/share.

Choose the Form of the Destructor

Last month, I was pleased to discover that, although Interactive Brokers has recently disallowed UVXY in retirement accounts because it’s a “special MLP”, buying LEAPS puts is apparently okay.

So on December 19th I bought a couple contracts with a $9.00 strike:

Well the stupidest financial instrument ever created did it’s job and continued to throw piles of money into a dumpster and light it on fire.

Shortly after the underlying dipped below the strike price, I went ahead and closed the position on January 8th.

But apparently I forgot to twitter it. Sorry.

The trade was open for 20 days, and netted $67.55 in profit on $1,050.84 invested. That’s good for a 117% annualized return, which is pretty okay in the grand scheme of things.

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 (as long as I can remember to post it).

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.

Pay Days

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

Total investment income of $1,333.59 with a taxable total of $15.87. We’ll call it 13 “pay days” with 33 individual payments received.

Options premiums represent $347.02 of that total.

Capital gains made up $342.55.

Which leaves $628.15 of actual bona fide dividends (and $15.87 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.

One loan got charged off this month. Boo! The number of bad loans we’ve invested in is now 9 out of 210 or ~4.29%.

Month over month, it looks like a couple loans that had been in trouble might have become current, but unfortunately there is a loan in default that isn’t represented in this table. So the extremely late (31-120 days) category went down by two, but that’s because of the one charge off and the other in default…so I’d expect that default to be charged off by this time next month.

Meanwhile, we’ve added another note to the “grace period” column. So things are kind of moving in the wrong direction.

Oh well.

Month

In Grace Period

Late (16 -30 days)

Late (31 – 120 days)

Charged Off (aggregate)

End of 2017

0

0

6

8

January 2018

1

0

4

9

I’m glad I started tracking this stuff last year. It should be fun to continue to follow it through 2018..

Lending club’s algorithm is suggesting I should write down $76.35 worth of principal for the five loans that are late and the one in default, 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 ($89.48), so maybe things aren’t going too badly after all.

I’m losing interest in my new experiment which involves buying late notes on the secondary market at a discount. I feel like I have a good set of rules to follow to pick out decent loans among the garbage on the secondary market. But it’s so tedious to do. It continues to remain a separate deal for the time being. If/when I ever decide to just cut bait on this half baked idea, I’ll recognize the loss here and move on.

Anyway, here’s the latest on all that.

Comparisons

Month over month, investment income was up 13.9% compared to $1,170.39 in December. 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.

For example, last year in January, I liquidated a bunch of holdings before we moved to cover the down payment on our house in Denver. So YoY investment income is technically down 74%. But we all know that’s silly.

That’s what I get for counting it this way I guess.

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

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

JANUARY – INVESTMENT INCOME HISTORY

Year

Dividends

Options

Capital Gains

P2P

Total

2015

$3.94

$0.00

$0.00

$0.00

$3.94

2016

$620.54

$45.85

$0.00

$0.00

$666.39

2017

$373.86

$470.66

$4,304.34

$27.66

$5,176.52

2018

$628.15

$347.02

$342.55

$15.87

$1,333.59

Pretty cool huh?

Raises

WHG increased their dividend by 9.7%, which marks 16 consecutive years of raises. My yield on cost is up to 5.4%. This is one of my oldest holdings, and it continues to be one of my favorites. I’ve recently started getting more aggressive about initiating an additional position in the inherited IRA through cash secured puts.

Honorable mention goes to DIS and NKE who raised their distributions by and 7.7% and 11.1% respectively. Unfortunately we didn’t own any shares for their previous payouts, so I don’t get to take credit for “earning” these raises…but it’s still dividend growth and worth mentioning.

So all in all that was a pretty good start to the year if I do say so myself. What do you think? You like my trades? Think I’m crazy? The comments are wide open. Make your opinion heard.

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