It’s time for another income report.
I generally called these a dividend review in the past but given that these reports include income from bonds and even money market funds, it just made sense to change it to an income report going forward. After all, whether its stocks or cash or bonds, it’s all money that’s generating income and being re-invested. I don’t count income that’s coming in from something like an emergency fund that’s not allocated to investing.
Since I’ve been a lazy bum, I’m also combining February and March into one post. After all, if you look at the calendar, I’m sure you’ll realize that we’re nearing the end of April now so I needed to catch up.
This year’s growth has been wild mainly due to those things that aren’t dividends in this income report. Bond yields and cash yields have soared as the fed boosted rates and since most of my investments in those areas are very short term, the income caught up really quickly and prices weren’t impacted too much.
I was not a yield seeker when rates were low and am now richly rewarded for being conservative in an area that’s supposed to be relatively conservative. It just didn’t seem worth it to me to get a 2% yield boost but risk a 20% price cut if rates rose so I didn’t invest in anything long term. Now, my bonds have held up well and they’re paying 4-6% yields which is pretty damn great as long as inflation doesn’t continue to be well above that(and it does seem like it’s slowing down).
Now let’s get down to the nitty gritty of the income report. February is a small month usually but as I said it’s likely to grow at a solid clip this year and March is one of my bigger months as many of my ETFs and index funds pay quarterly doling out their first payment in March.
Let’s start the income report party with February. Last year’s February came in at $413.61 so let’s see where it sits now.
February Income Report
February kung fu punches its way into a record with a $777.42 total or an 88% boost over last year.
That type of growth rate is pretty awesome and certainly shows the kind of impact better yields can have on your income.
Steve, my dividend employee, earns himself $4.66/hr. which isn’t anything amazing but is growing at a good clip. Way to go bud, way to make your dividend investing parents proud.
The best part about this influx of cash is that I re-invest it all and will generate an extra $26.43 in annual income going forward. That’ll compound nicely into the future as that growth on top of growth will certainly yield results for years to come.
You can see the kind of growth I’ve seen since I started tracking this in 2016. This year and its parabolic growth is certainly unexpected and could move the other way if rates shrink quickly due to an economic shock but I’ll enjoy this type of growth while it’s here.
Generally January and February are some of my smallest months of the year($268 and $413 last year respectively) but bumping those up to $667 and $777 respectively is an awesome start to the year.
Now, I’m wondering what kind of growth I can see in March which already starts at a much higher place so the growth rate will be far more muted.
Last year’s March came in at $2,629.46 so let’s see where we are in 2023.
March Income Report
March comes in at $3,281.19 or a 24.8% boost over last year.
Given that this is a much bigger starting point, the growth rate is pretty solid and in line with some of the growth March saw early in my investing career. It may be smaller on a % basis than the other months but the y/y growth here is $600+ in this one month alone which is almost as high as February on its own.
Steve, in one of these bigger months earned $19.69/hr. and 3 months in, he’s sitting on a $9.42/hr. wage. That’s a damn good start to the year, given that the months generally get larger as the year progresses due to more investment dollars flowing in.
In fact at this point, YTD, I’m 42.7% higher in income than I was in 2022 and while that growth rate will likely shrink as some of the higher yields that were already reflected in the latter part of the year start to lap, it’s still a fantastic start and likely might lead to some of the highest growth I’ve ever seen.
Re-investing March’s income is a $111.56 boost to future income and that brings the YTD boost to $160.68 which is not a bad sum that will continue to grow as the year progresses especially since March is usually the smallest of the four big months as shown below.
It’ll also be interesting to see if 2023 is the first year where I hit $1,000 in a month outside of those big 4. It’s unlikely but even February is not that far away and I plan to keep investing as much as I can so maybe we’ll get closer towards the latter part of the year.
Overall, it’s been a good year for income so far especially if you’re invested in bonds and/or hold some cash on the side. Cash is no longer worthless as it was just a few years ago but actually generates income so an investor can wait and hold for better deals to arise.
It’s no surprise that stocks have been repriced based on that fact and I wouldn’t expect stock pricing to expand unless that changes so earnings growth will have to drive price appreciation whereas its been P/E ratio expansion more so than growth in the past few years. I much prefer this type of pricing environment because it allows patient investors to find good deals and drives less poor decision making chasing some sort of yield because you can’t get it anywhere else.
Yield at all cost leads to poor risk management and yield at low cost(from cash or short term bonds) leads to better risk profiles of portfolios. We’ll see where we go from here but the first 3 months are certainly looking solid in terms of income even if returns haven’t been all that amazing.