Month in Review – January 2019

Happy New Year, everyone!

Stevie told the plunge protection team to get to work, and Donnie told everyone to BTFD on Christmas. Now the Fed appears totally beholden to market sentiment and is diligently doing everything it can to totally obliterate the value of your money.

What a time to be alive.

Oh well. There’s only so much we can do. One more month is in the books, so let’s take a look and see how it went for the wizard household.

Portfolio Summary

Metric

End of January 2019

End of December 2018

Total Invested

$511,291.10

$507,991.43

Market Value of Total Invested

$526,022.52

$505,484.34

Allocation % – Equity

54.12%

54.02%

Allocation % – Bonds

17.52%

17.98%

Allocation % – “Other”

3.05%

2.97%

Allocation % – Cash

25.30%

24.92%

Income Assets – Invested

$269,826.30

$275,343.19

Income Assets – Market Value

$268,644.70

$263,658.36

Projected Annual Income

$18,741.33

$24,979.19

Invested Yield

6.98%

9.07%

Market Yield

6.95%

9.47%

Stock Purchases

No new purchases in January. I believe that the swoon in December was just the beginning of a bigger market correction. So I’m waiting for more volatility.

Thou can’t time the market, so thou shalt not try to.

Pay Days

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

Total investment income of $1,981.44 with a taxable total of $169.05. We’ll call it 17 “pay days” with 47 individual payments received.

Options premiums represent $864.14 of that total.

Capital gains made up $0.00.

Which leaves $948.25 of actual bona fide dividends (plus $23.60 of P2P interest, $103.99 of sports betting wins, and $41.46 of treasury 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 got charged off this month. Yay!

Unfortunately the overall situation didn’t really improve month over month, nor did it get particularly worse. We still have five very late loans, and one in the “Grace Period” category.

The number of bad (charged off) loans we’ve invested in so far comes to 23 out of 270 or 8.52%.

I’ve given up reinvesting principal as it gets paid back to me. The number of quality loans that meet my selection criteria has plummeted recently, which means I can’t keep up with the amount of principal that’s accumulating.

I’ll continue to track the existing loans’ performance to their maturity.

Month

In Grace Period

Late (16 -30 days)

Late (31 – 120 days)

Charged Off (aggregate)

End of 2017

0

0

6

8

End of  2018

1

0

5

23

January 2019

1

0

5

23

Somehow Lending club’s algorithm is suggesting I should write down $66.85 worth of principal for the  loans that are late, but as the eternal optimist, I’m going to continue to wait until the loans are actually charged off before I recognize the loss.

That is down slightly from what it suggested last month ($74.96), which doesn’t makes much sense since the situation is nearly identical. Must be something about the mix of the late loans, or the one in the grace period doesn’t have as much principal as the one from before. Who knows.

Comparisons

Month over month, investment income was down 56.02% compared to $4,505.13 in December.

Month over month comparisons are stupid given the way that I count “income”. Options activity and capital gains are pretty erratic. But that’s how I count it, so it is what it is.

I now have 5 years (!) of data on my income tracking sheet. So I can make graphs like this:

Pretty cool huh?

As 2019 progresses, I will start tracking more things here using fancy graphs like this one. Stay tuned.

Raises

Three of the dividend distributions represented a raise this month and one represented a cut.

WHG increased their quarterly payout from $0.68 to $0.72/share, which is good for a 5.9% increase. Considering shares yield 7.8% as of yesterday’s close, that is a phenomenal dividend growth rate. It is easily covered by FCF and the company has zero debt on their balance sheet.

DIS increased their semi-annual payout from $0.84 to $0.88/share, which represents a 4.76% increase. Although it’s better than nothing (I’m certainly not going to give it back), it’s extremely disappointing for a stock that is only yielding 1.6% as of yesterday’s close. If you’ve been following me on the twitter, you’ll know that I’ve been pretty aggressive about selling covered calls against my DIS position in the inherited IRA. This is one of the reasons why.

NKE increased their quarterly dividend by 10% from $0.20 to $0.22/share, which is just dandy. That’s the kind of growth you’d expect to see from a low yielding stock (looking at you Mickey Mouse). Unfortunately I allowed my shares to be called away on December 7th, but I managed to hold on through the ex-div date so I enjoyed the benefit of this distribution. I’m not sure if I want to get back into this position or not.

GE infamously cut its dividend from $0.12 to $0.01/share (a ~92% decrease). This is the second cut in as many years and it’s obviously a bad look. Honestly the penny is kind of a slap in the face if you ask me, but I guess it’s supposed to symbolically represent that management is committed to returning to a growing dividend at some point in the future. Yada yada yada. The position in GE is relatively small and in my wife’s ROTH IRA account. I’m not sure if she’s going to hang on to those shares or not. She’s mentioned to me that she doesn’t want to sell for a loss. If anything, it will hopefully be a good lesson in the sunk cost fallacy.

So the new year is off and running. Tell me what you think in the comments below.

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