December dividend update

Happy new years!

Welcome to the last dividend update for 2016. It’s the biggest one of the year for us ETF/mutual fund investors as many of those either pay quarterly and/or annually in December. I do have one fund that makes up a good portion of my portfolio that pays entirely in December making this my biggest dividend month of the year.

I hope you had a great holiday this year and enjoyed your time off if you were lucky enough to have any; I know I sure did.

2016 was a good year for me and I look back at it fondly and I hope it was the same for you as well. I’ve got some plans and goals for 2017 I’ll talk about in a future post that will hopefully get me to my goal of financial Independence sooner!

The market has continued to perform decently in the last month of the year and I’m excited to see what the new year brings. I always like this time of year when the calendar turns and we can look forward to a fresh slate of new earnings that will give us some indication of how companies did during the important holiday season and what that means for potential 2017 performance.

I’ve written before in my last portfolio update how a lot of 2017 projections have a pretty high growth rate assumption built in and I’m eager to see if that comes to fruition or if the estimates are overly generous like they have been in the past years which has lead to pretty high valuations. I wonder how long stock prices can keep growing if earnings are flat like they have been in the past few years and that’ll be one of the things I’ll be keeping a close eye on when evaluating stocks in 2017.

Let’s take a look at how my portfolio employee Steve did in December, one of his busiest months.

2016 Dividend Update

December comes in at an impressive $2940.09! It’s always exciting to see a month that large and I’m happy with the results.

Steve, my dividend employee finally got off his ass and did some work around the holidays pulling in a respectable $17.64/hr wage. If only he could do that every month, I’d be financially independent already!

For the year, the total becomes $7023.82 or an hourly annual wage of $3.51/hr. I’ve mentioned a goal of $4.50/hr before in this blog and while I didn’t hit it, I’m not too upset about it since that was just a number I made up early on when I started this blog. It had no basis in reality based on my portfolio yield and totals. The reality is that my portfolio is too small to even sniff at a $4.50/hr salary unless I wanted to chase yield and while I may increase my yield in 2017 as interest rates rise and some of the valuations of dividend payers fall back to earth, I’ll still likely be lower than some of my fellow dividend investors out there.

The truth is that I’m not a pure dividend investor as a lot of my investments are in small and mid-cap growth companies that don’t pay dividends. I recently did an analysis of my portfolio and found that I was overestimating my current portfolio yield based on the recent changes I made to my portfolio and it’s closer to 2.2% versus the 2.5% I had assumed initially.

While dividends are awesome, they’re not tax-efficient and while I’ll likely transition into a bigger yield strategy as I get older, during my early years I’d rather grow via capital appreciation than dividend payments to maximize my post-tax returns. I think the recent run-up in dividend payers due to low interest rates has also made their valuations tougher to swallow so I haven’t added much in the high yield area in the past year.

I’m still happy with the dividend performance of my portfolio for the year as it’s 7k in income that will be reinvested and continue to work for me. It’s not close to enough income to cover my expenses YET but it does start to add up through the years and I look forward to seeing it grow through additional contributions and reinvestment. Reinvesting December’s income will mean I’ll add around $64.68 to my forward annual income or about $5.39/month.

One thing to notice is that my dividend income actually shrunk between 2015 and 2016 showing a reduction of about 7.5%. That’s sometimes going to happen when investing in mutual funds as fund payouts aren’t always constant year to year as portfolios in those funds can change(I do have one active fund). The main driver of that difference however is a special dividend that one of my funds paid in 2015 and partially a sell-off of some individual shares(UNH) that pay in December.

If I were to exclude that special dividend in 2015 then my growth y/y is 15.8% which I am very happy with. The goal long term is to show y/y growth and even q/q growth in dividends and I think I’m well on my way there so far. I look at the graph which now has a full year of data and I see it as a great starting point for this journey. I will likely make some modifications to this graph to include prior years with the next update to give a better comparative view with each successive update.

I will also be doing another post in a few weeks that will go over my 2017 goals which will have some more reasonable and calculated dividend goals that will actually be based on real numbers. I won’t make them too easy but I want to make sure they’re achievable unlike the goal this year.

That’s it for December. Steve and I wish you a happy new years hope you and your own dividend employees have a happy and fruitful 2017.

December Total : $2940.09
2016 Total : $7023.82
Portfolio monthly hourly wage : $17.64/hr
Portfolio annual hourly wage : $3.51/hr

*Note that this entry was updated 1/7/2017 from the previous total of $2863.44 as I noticed I missed a dividend from my HSA when writing my portfolio update.

10 thoughts on “December dividend update

  1. That $2,800 could pay for a month of expenses for many Americans, and that $17.18/hour is pretty impressive, even if it is only related to one month a year. It's like you've doubled a normal person's income for that month. Good luck in 2017.

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  2. Well done, this is quite impressive. It is unfortunate that the dividends are so high in some months and then so little in others. It would be nice to have a steady flow of income but hey… no complaints here. Well done

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  3. Hi timeinthemarket,

    Way to go worker Steve! 🙂 That's an excellent end to the year.

    I think a total return strategy definitely makes sense. Your 2.2% average yield is about the same as the S&P 500.

    It'll certainly be interesting to see what 2017 brings. Best wishes,
    -DL

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  4. Ciao Steve!
    WOW, I just read this first article on your blog and I am totally impressed already! You have a great portfolio if you can dish out 2000+ dividends in 1 month! Any chance to see the composition of the PF? Ciao ciao
    Stal

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  5. Very impressive December. Love the hourly wage calculation as well. Are you calculating that based on 40 hours a week or something more realistic? I agree with you that the best of both worlds is total returns and, from a tax efficiency standpoint, capital gains are probably the best.

    Scott

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  6. What an incredible month, well done!

    A little over 7k for the year is also amazing! You have done a fantastic putting money to work and the rewards are paying you handsomely. It will be exciting to see that number grow in 2017!

    Keep up the fantastic work!

    Blake

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