A Month of Fund and ETF Dividends

Any ETF or mutual fund investors look forward to the dividends in the quarter ending parts of the year. That’s because so many of those funds and ETFs pay out on a quarterly basis and that means September is always a big month on the dividend front. Thanks ETF dividends!

There are of course monthly payers but they’re a bit more rare due to the administrative burden of such a payout. It’s just easier to do ETF dividends on a quarterly basis. Some ETFs and funds only do it annually in December.

I own a lot of these quarterly payers(and one annual payer) in my 401k and Roth IRA so I’m always excited for these months. They are always a big boost to the overall income and make up a big portion of overall dividends for the year. Last year, quarter ending months(March, June, September and December) made up 86% of my overall dividends and this year is no different.

I do expect that percentage to drop a bit as I invest in more monthly payers via my M1 Finance portfolios but these months will still remain a huge portion of my overall dividends going forward.

This year has been a tough one on the dividend side with a variety of cuts, freezes and reductions sweeping a few industries. Even if you don’t own any individual stocks that were impacted by those, it’s likely you felt the impact if you own any index funds or dividend ETFs that hold a variety of industries. Beyond that, rates for bond holders were slashed as well leading to lower payouts across the board in many funds and ETFs that hold bonds.

Personally, I took the downturn in March to re-allocate into some growth names that don’t pay many dividends as well which has borne good results in terms of portfolio size but not in terms of dividends. That’s not a huge deal for me. I’m not really a dividend investor as a lot of my money is in simple index funds but I do dabble in some dividend strategies here and there. Still, I enjoy tracking dividends as they do tend to make investing during the tough times easier. It’s always nice to see growing payouts even when the portfolio might stall or drop.

However for a variety of reason, I haven’t seen much growth in that area this year. I’ve been treading water and staying on the right side of growth for the year being up 0.2% before September. I’m hopeful that September finally brings about some growth as it will definitely impact the year due to being such a big month.

On the expense side, I’m coming off an expensive month in August due to some car expenses and insurance bills. September was a much lighter month on that front and should help bolster future dividend growth with some additional savings.

I’ll start with dividends here so let’s see where we ended up this month. As a reminder, last year’s September came in at a healthy $2,379.39 in dividends.

September Dividends

September came in at a solid $2,535.20. That’s a 6.5% bump over last year and while growth has slowed y/y, I won’t complain about any growth in a year like this one.

It’s always hard to get high percentage growth when the numbers are much bigger so 6.5% on such a starting point is pretty damn good. I’m pretty excited to see growth returning to these bigger months as it shows me the additional dollars flowing in at lower prices during the March dip are starting to pay off.

After all, I had negative growth in March and June, my two other big months so seeing this positive number is nice.

The dividends received this month will be re-invested and based on my portfolio yield will help generate $74 in annual income going forward. That’s the beauty of dividends, they’re part of a healthy total return and will help grow my portfolio and future dividends due to the power of compound growth.

It’s great to be in a spot where these numbers are starting to get pretty large because their impact on future income is pretty large too.

My M1 Finance portfolios which I review on this blog have helped this number a bit but still remain a small portion of my overall dividends. However, they’re growth at a rapid clip and will start to impact the smaller months in a bigger way soon. Last September’s $24.18 in those accounts grew to $81.69 this September due to additional funds flowing in and consistent re-investing of any dividends received.

Steve, my dividend employee, always works hard this months and that’s seen in his salary. His wage this month was $15.21/hr and that brings his annual salary to $5.66/hr. That’s still not quite enough to live on but it’s getting up there.

Steve really makes most of his month in these few big months and the good news is that the biggest month is still ahead. After all, some funds pay out annually so December is one of the biggest months of the year for me as evidenced in the graph below.

That’s when the mutual fund and ETF dividends really kick into high gear as most funds pay out something in December. That includes the quarterly payers, the annual payers and even the bi-annual payers(which pay in June and December).

It’ll be interesting to see how December will fare this year but I’ll make sure to keep investing whatever I can to help that number tick up year over year. It’s a big hurdle to cross but I’m hopeful to see growth in December like I saw this month.

For the year, I’m back up to 2% growth which isn’t amazing and far below the goals I set for myself this year. However, the world is pretty crazy right now so I’m not expecting much. Being able to hold onto my job, keep investing and see growth at all is something I’m very thankful for.

I’ll be back to a smaller month in October but hopefully those M1 Finance portfolios help see some bigger growth there as well.

September Total : $2,535.20
2020 Total : $8,486.46
Portfolio monthly hourly wage : $15.21/hr
Portfolio annual hourly wage : $5.66/hr

September 2020 Expenses and Savings Rate

August was a high expense month so my savings rate stumbled a bit. Still, anything above 0% in this environment is amazing so I won’t complain.

In September, I was hoping to bump it up a bit. Last September, I hit a 57.8% savings rate. However, that was due to a late wedding gift from a foreign relative(one year late but better late than never!). I wasn’t expecting to beat that but was hoping to come close if possible so let’s see where I ended up and where my money went for the month.

My savings rate for September was 54.1%. Adding in employer contributions brings that number to 61.7%.

On a gross income basis, I saved 37.7% of my income with a 43% savings rate after employer contributions.

That’s pretty good.

The story of this month was low spending. It’s a simple as that. It was a two paycheck month and it’s always great to see a solid savings rate during a two paycheck month. It’s also the 6th month this year where I hit a 50%+ savings rate.

That’s pretty awesome but the crazy thing is that I had 7 months last year at this point where I hit a 50%+ savings rate. I don’t even remember how I did it last year but I guess I was pretty lucky in that I really didn’t have many one off expenses like my two root canals and some car expenses this year.

In that sense I’m actually a bit behind on my savings this year versus last year but hopefully I can catch up before the year is over. I’ve been lucky enough to retain my job and we’re coming up to winter where we don’t generally spend a lot of money so we’ll see how things go. I still have some dental care(floss your teeth kids or as an adult your teeth will suck) to finish off the year and need a new set of tires still so it’s possible that it won’t happen but we’ll see.

This month, expenses were pretty limited. There’s the usual suspects with rent, health insurance and groceries being in the lead.

The only big surprise expenses were some pet expenses where I had to pick up some medications for my dog and on the gift side, where I picked up a second gift for my wife for our anniversary.

The anniversary was nice but not being able to do much was a bit of a downer. We usually like to take a nice trip around this time of year and enjoy the end of the warm weather. Last year, we took a nice trip to Atlanta for our anniversary and ate our way through the town’s fancy restaurant scene. This year, we had take out pizza.

What a difference a year makes in one’s ability to do things!

Overall, I can’t complain about this month. I have a job, I grew dividends and hit a savings rate of 50% for the 6th time this year. I may be lagging a bit behind but maybe I can catch up before the year is over.

October is a three paycheck month so my savings rate “should” be pretty good and while this is the end of mutual fund and ETF dividends until December when those ETF dividends will really shine. I’m hopeful I can pump more money into my M1 accounts and keep growing those smaller months too.

It won’t be a record growth year but any growth in a year like this will be nice. Hopefully your September was good too and you’re staying safe and doing well!