Hey gang, it is December already and I’m back for another dividend update! It’s crazy how fast this year has flown by and now I’m staring down the final month of the year; the big kahuna month of dividends for those of us who have most of their money in mutual funds or ETFs.
November is another small month as I only hold one individual stock that pays in November(Apple) and I only own a handful of shares since Apple is already well represented in my mutual fund holdings. Anyone who owns S&P 500 mutual funds already owns quite a bit of Apple so there’s no reason to overdo it on the individual holding in that scenario.
Black Friday and cyber Monday came and went and both seemed to show continuing appetite for spending from the consumer sector which bodes well, at least in the short term, for the overall economy and the stock market.
I love the holidays. The lights, merriment, seeing family and friends you haven’t seen in a while almost make winter bearable for a bit! As an investor, I like seeing the trends that emerge and set the tone for the next year. It’s always good to look to your friends and family for investment ideas. I don’t mean asking them for a hot stock tip but looking at what they’re buying and what people in general are talking about as that might lead you to your next great investment idea that might help to increase your long term return or improve your dividend picture if that company happens to pay a dividend. Apple is one of my holdings and I can look at what’s going on around Christmas season to get a general idea of whether or not I want to continue holding it or maybe even add more.
I even participated in the shopping a little bit by buying some warm winter clothing that was 30% off on black Friday and I didn’t even have to leave the comfort of my own home. I ended up going with the North Face brand for my jacket. I’ve had VFC as a stock to watch if the price gets attractive for a while as the brand is all over the place during fall and winter in the northeast.
As an investor, I was also interested by the continuing changes in the shopping season as more and more deals moved online even before the big cyber Monday day.
Black Friday is the big start of the holiday shopping season and here’s a little piece of trivia for you. It’s called black Friday because historically retailers operated at a financial loss(red ink) and moved into a profitable position during the holiday season(black ink was used to indicate positive amount). There’s also an alternate origin that points to anything labeled as black as a calamity and the start of the holiday shopping season bringing with it unmatched traffic, employees calling in sick, etc. and I can certainly understand that as well.
Historically black Friday always seemed like a get out and shop type of day to me but this was the first year that I can remember where it felt more subdued. Black Friday saw a ton of online deals making Cyber Monday less of a big deal as that’s just a continuation of what we already saw on Friday.
Long term, that bodes well for retailers with a big online presence but not sure it bodes well for the brick & mortar stores as people have less and less incentive to get out there and brave the insane crowds. It’s also a lot easier to shop around when shopping online versus being in a story that carries everything. I can go to various stores without leaving my seat and find the best deal on each item.
I certainly prefer sitting in my chair instead of waiting outside in the cold and seeing if something I’ve wanted for a while happens to get a big price cut.
One of the reasons I don’t invest in retail is that I don’t see the long term value in brick & mortar stores. The stocks are often great short-term plays but I’m not sure I see them as part of my long-term portfolio. I think the long-term thesis still exists but the store format needs to change to get people out there shopping. People still love shopping in person but convenience will win out more often than not and more people will move their shopping online which doesn’t benefit the retail sector unless something changes. New store concepts like Amazon Go are interesting test studies and it’s also interesting to see online retailers move into a physical presence.
There have always been certain things that are better bought in stores but now even those are quickly moving online as returns and exchanges there are easier than ever. Clothing as an example is something I’ve always preferred to buy in stores but my jacket purchase was done online and I couldn’t be happier with the transaction and the deal. I think physical stores have to come up with something in the near term to stem that move and it’ll be interesting to see what happens in the next few years.
In any case; back to dividends and as jacket set me back a bit hopefully I’ll have some dividend months here that can cover that purchase! I must admit I do like the romanticized idea of stock dividends covering some sort of cost and that’s why I enjoy tracking my dividends. I think the idea that a payment could cover bill #1 or purchase #2 is one of the main reasons so many people love dividend investing. As an example, if I owed VFC stock and they paid me a $200 dividend every quarter, it would feel like that jacket was on them!
The overall goal is to have dividend income that fully covers my expenses which would essentially mean I’d be financially independent at that point. I don’t specifically invest in dividends for that goal but invest in good companies overall and could also sell off stocks as a means of creating a dividend but it’d be much simpler if I never had to sell of anything and could live perpetually off dividend payments. I’m still far from there at this point but every dollar invested and reinvested helps me reach that dream of early retirement or financial independence.
Let’s take a look at how much I made in November.
November came in with a rip roaring $79.04. This is one of those general off months for us ETF/mutual fund investors who see most of their earnings on a quarterly basis. It’s actually really hard to see these off-months on the graph above as the quarterly month totals dwarf everything.
Steve my dividend employee continued to take time off as he gets ready for December which is my biggest dividend month if the graph above doesn’t make that obvious. This month Steve earned himself a $.47/hr hourly wage which isn’t quite enough to live on around here so I’ll have to continue to support Steve by keeping a full time job.
For the year, the total becomes $4083.73 or an annual hourly wave of $2.23/hr. I like tracking the hourly wage because it shows me what kind of lifestyle my portfolio can support. It’ll be nice to see it grow through the years and cross important thresholds likes the minimum wage and others.
November this month also marks the first full year of dividend payments I’ve tracked for a rolling 12 month period which gives me an idea of what to expect for the full year if December is close to what it was last year. Despite my portfolio growth, I don’t expect December this year to be much larger than last year as last year had some one time payments that will likely not be repeated this year. For anyone interested, the rolling 12 month total is $7259.31 or an hourly wage of $3.63/hr.
If anyone remembers, my goal for this year was $4.50/hr which simply isn’t going to happen unless my December growth is somehow enormous. ETF/Mutual fund payments do vary year over year but I’m not sure the growth will be anywhere close to that high and as I said before, I’m not expecting this December to be much bigger than last year. I wouldn’t even be surprised if it was smaller.
The truth is that my goal was unreasonable based on the yield of my portfolio and I stood little chance of reaching it this year. I’m planning to set a more reasonable goal next year(it might be 4.50/hr depending on what hit this year).
Contributions as always are the biggest part of growing dividends but reinvesting them helps as well. Reinvesting the $79.04 Steve earned this year will improve my annual income by $1.98 which isn’t huge but it’ll add up in the long term.
That’s it for November’s update. Happy holidays to all. Hope you found some good deals during the sales last week if you were looking for something like I was. I’m looking forward to seeing what December has to bring and saving a little extra too since December happens to be a three paycheck month for me!
November Total : $79.04
2016 Total : $4083.73
Portfolio monthly hourly wage : $.47/hr
Portfolio annual hourly wage : $2.23/hr