Dividend and Expense Review – June 2019 – Summer Expenses Start Up
Welcome to summer time. This is the part of the year where dividends really start to ramp up. It’s also the part of the year when summer expenses start to creep up.
One great part of the summer is the awesome weather. It has been a bit too hot but I won’t complain about all the daylight we get. Hell, pretty soon, it’ll be winter again and I won’t see the light at all so I really want to make the most of it when it’s here.
The nice weather means we’re out more often and as expected, summer expenses go up this time of year since we’re outdoors more often.
We haven’t taken any long distance trips so far but we do day trip quite often. That generally includes a nice dinner at a high end restaurant to cap off the day and even a day trip can get pretty expensive when the end result is a fancy meal at one of our favorite restaurants.
As far as travel goes, those day trips might be it for us this year which would mean good things for the savings rate. We had our wedding and honeymoon last year so we don’t necessarily need to do anything crazy this year. On top of that, we thought we were on our way to buying a house a few months ago so we didn’t plan anything. Unfortunately, that ended up falling through but that’s just how things work sometimes.
However, the upside of that is that now we get to save quite a bit more than we would have otherwise. That’s especially true if we don’t end up taking a big vacation this year. We might do something small in the fall but until then, the savings bonanza shall continue even if our summer expenses go up a bit.
On the dividend front, things are looking great so far this year. My savings rate has been killer and as always I front loaded a good part of my 401k. One of my biggest holdings, UNH, raised the quarterly dividend 20% to $1.09/quarter. This company has been killing it on the dividend front as the 20% this year is the smallest bump in years. I won’t complain about that. Beyond that, the lower tax rates have caused other companies to raise their dividends as well.
Since I hold many mutual funds and ETFs, I benefit from all that as well. Even beyond the 401k, I’ve been pumping more money into my M1 Finance account. That’s still a small account but it’s growing and will soon generate meaningful monthly dividends. I have two accounts there, one with some riskier industry bets that I wouldn’t own otherwise. The other tracks the S&P 500 dividend aristocrats. It’s an easy way to get diversified exposure to growth or dividend companies I wouldn’t normally own.
Due to all that, my growth this year has been nothing short of amazing. Through May, I am up 39.89% and that’s just freaking awesome. Now, I’m diving into June which is one of the biggest months I’ll see all year. I’m looking at March which grew 28.4% over last March as a guidepost to what I may be able to see here. However, since the starting point in June is higher, I’d be impressed if I achieved that.
Last year’s June came in at $1934.01 so let’s see where I am now.
June clocks in at $2,499.94! Just missed 2.5k by 6 cents! Still, that’s a 29.26% bump over last year.
I’m pretty psyched about this growth rate as it’s totally eclipsing what we saw last year. June barely moved in 2018 as my savings rate slowed. Now that it’s up again, things are moving along very nicely. I’m sure the yearly dividend raises from all my holdings helped too.
This is really showing the power of continued investing, compound growth and reinvesting. I was just barely north of $1,000 in dividends in 2016 and now I’m blowing past $2,000 like it’s nothing. Next year, I can see $3k+ in this month!
This $2,499.94 reinvested will boost my forward income by $57.50. Add that to all the new money flowing into stocks each month and you can see why I’ve been so successful lately.
June brings the total to $5,441.46, a growth rate of 34.8% versus where I was this time last year. That’s a good number and the goals I set for this year are looking solid.
Steve, my dividend employee earned himself $15.00/hr this month. That’s not a bad wage but I have to remember that these quarter ending months are the big ones and all the other months are much smaller. Steve’s hourly wage for the year does go up to $5.44/hr but it’s still far below where it needs to be for Steve to be self sustaining. However, Steve’s two biggest months, September and December are still ahead so the hourly wage will grow by the time the year is over.
You can see in the graph below what’s ahead. There’s a few small months but the big ones are still out there. I don’t expect October this year to be so high since there were a few ETFs that paid late last year. However, that should mean good things for September if they pay on time as the growth rate there will benefit.
As such, I’m hoping to see a nice jump in September like I did this month but December is always a mystery. However, it’s quite possible, I see my first $4,000+ month and that’d be awesome.
I’m certainly driven to save as much as possible before we get to those months and to drive some new records on both the savings rate and dividend side.
Speaking of savings rate, I’m coming off a three paycheck month so my savings rate likely won’t be as good as last month. However, I’ve been killing it on that front as well which is no doubt driving the great growth I see in dividends. You could say my savings rate is paying…dividends. I’ll see myself out.
June Total : $2499.94
2019 Total : $5441.46
Portfolio monthly hourly wage : $15.00/hr
Portfolio annual hourly wage : $5.44/hr
Summer Expenses and Savings Rate
Last year’s June was a three paycheck month and I ended up with a 54.39% savings rate. At that point, I still had my car payment and was tossing additional money at it to get it paid off.
Let’s see where June in 2019, now that I’m down to two paychecks, ends up.
My savings rate came in at a very even 50.1%! That’s a great result for a two paycheck month.
Adding in employer contributions brings that number up to 56.98%.
On a gross income basis, I saved 38.55% of my income. That number jumps up to 43.85% with employer contributions.
I must say that so far 2019 is an epic month when it comes to savings. Even June, a month with some extra summer expenses is a complete success. You can see that the restaurant expenses were up a bit this month as were grocery expenses as we grilled out a bit more often or went to parties where we brought some food. That’s what summer does to me as I like to eat out and travel a bit more.
On top of that, I spent a few bucks on my pet, refilling some of her food and medications. Plus, it was my wife’s birthday so she got a few small gifts here and there. Neither of us are in need of a lot so I got her a few practical things that she’ll enjoy and use for a while. On top of that, I took her to a very nice dinner at one of our favorite restaurants.
Still, our expenses were surprisingly low as we spent a lot of time doing free things. We’re nerds so playing Wizards Unite(the new Pokemon Go based in the Harry Potter) universe kept us entertained. Plus, on the income side, I added a few extra dollars(almost 1.5% of my income!) via some side hustles that I plan to write about soon which helped the savings rate a bit.
So far this year, things are looking great as evidenced below.
June is my 5th 50%+ savings rate month of the year. That’s just crazy when you consider I had 6 total last year. On top of that, I had a few negative months last year which I likely won’t have this year. Those are the wedding and honeymoon expenses that won’t be repeated this year.
Not having the car payment this year certainly helps. That’s almost a 6% boost to savings rate each month right there. My income went up a bit this year too so if you combine all that, it’s a recipe for success.
However, it’s not all income that’s driving these results. After Q2, my expenses this year are 20% lower than at this time last year. That’s a big deal!
The usual suspects still show up. Rent is #1, groceries are #2 and health expenses and restaurants clock in at #3 and #4 respectively. However, beyond that, my expenses have been pretty limited so far this year and I’m not expecting that to change much as the year progresses.
That means good things for my savings rate and should mean great things for my dividends as the year progresses.
Disclosure : Long UNH
Does M1Finance offer dividend reinvestment?
I am currently using Robinhood, and one of the biggest downsides is that they do not offer dividend reinvestment. And like I am sure you know, those fractional shares really add up over time! I might be looking to switch to a more established brokerage firm in early 2020 after tax season.
They don’t reinvest each individual dividend into the stock that paid but they’ll reinvest money per your allocation once the totals hit $10. That means if a stock you own pays $11 in dividends, it’ll get reinvested into other stocks based on what’s low in your allocation. It’s not true dividend reinvestment but using their methodology allows you to buy securities that may be under priced. Depending on how you look at it, that may be better or worse.