It’s October guys! Is it just me or did it get cold super quickly this year? I barely blinked and the summer was over, the days got shorter and winter is suddenly just around the corner. A lot of it has to do with work which is exceptionally busy this time of year which means the weekdays just fly by making for a rather enjoyable work environment. I’m not the type of person who just asks for work and I tend to avoid stress as well but I do much prefer a job that keeps me busy for the 8 hour workday instead of one where I’m bored all day surfing the net.
The only downside is that there hasn’t been a ton of time at work to do some due diligence on stocks I’m interested in lately. I still take a cursory look at what’s happening with the market every day and have all my alerts set up in case any bargains come up but the market has been rather flat lately so there hasn’t been much of interest out there.
I’m still dropping money into the market every week via automated purchases but that has slowed down lately as some additional expenses have crept into my budget like the medical costs I mentioned in my last savings rate update. I’ve also just got back from a small weekend vacation that will affect my savings rate in the near term. It was a lot of fun though so totally worth it. I always find experiences are the one thing worth splurging on as the memories are well worth making.
My savings rate may be down slightly but there’s still money going in and the dividends still keep rolling out.
September means a big number for those of us mainly invested in mutual funds or ETFs. I’ve had a few slow dividend months after June, a month that broke a quarterly(non December) record and it’s good to be back to another big month. June was the first quarter I broke $1000 in a non December month and that was great to see as was the 17% growth over the previous quarter.
Steve, my dividend employee seems to work extra hard in these quarter ending months so let’s see how he did in September.
The goal for September was to continue on the strong month we had in June and the results are great to see with another strong increase in quarterly dividends. September grew just under 9% from what we saw in June posting a total of $1265.09!
Comparing dividend months when invested heavily in ETFs and mutual funds is always tough as those can have erratic dividend payments. An individual security like UNH, a company I own will generally always pay the same amount each quarter. That means dividends are pretty predictable barring any dividend cuts.
On the other hand, ETFs and mutual funds will often vary quarter to quarter because they carry so many underlying securities that have differing payment schedules and dividend cuts/raises that aren’t as predictable. That means that while it’s nice to see consistent q/q growth in dividends, it’s not something that I’m counting on fully going forward including big months like December which can often have one off dividend payments of some sort.
I think most of the mutual funds I’m invested in are relatively stable and should continue to see dividend growth on a long term basis but there are some that will vary wildly year over year.
VWO, the vanguard emerging markets ETF is a perfect example of what I mean as you can see by the table below that shows the payouts for the past few quarters.
You can see a lot of variation in what an investor has gotten in the various quarters between the years as the underlying securities change and the various securities the ETF owns cut or raise dividends. September has been the one consistent spot but the other quarters have varied quite a bit year over year. VWO is a more volatile ETF as emerging markets are more likely to have volatile dividends due to the risky nature of those countries so this isn’t the case with every ETF or mutual fund but it is something to keep in mind.
The point I’m trying to make here is that while it’s nice to see consistent dividend growth so far when comparing quarters; it’s not something I’m banking on forever as there will be some off months here and there when some of my ETFs and mutual funds show a drop off from what they paid the year before.
The other thing that comes into play are one time large dividend payment like I saw last year with one of my mutual funds which may not happen every year. I didn’t really consider that earlier in the year when I set my goal of 4.50/hr for my employee Steve. That goal may be hard to hit unless we see another large distribution from that same mutual fund or another one(I’d say that’s unlikely) or the new dollars contributed since last year really pick up the slack(possible but looking unlikely at this point as well).
In any case, things went right back into gear after a few slow months for Steve’s(my dividend employee) business. This month he earned a respectable $7.59/hr making this the first non December month(that’s all holiday tips anyway) that Steve has made more than the minimum wage.
Adding that to his total for the year means an hourly wage of $2.64 so far this year. That will drop off in the next few months and the spike in December due to the seasonality of Steve’s work!
I’ve seen my dividends grow quite a bit so far this year due to all the contributions but reinvestment is another way to growth dividends year over year and these large months are perfect for that as $1265 is a big chunk of my overall monthly contributions for September.
That amount reinvested at my average yield of 2.5% means I’m adding $31.63 in annual income or $2.64 in monthly income simply by existing and reinvesting my dividends. That’s great news for the long term as I can watch the money compound!
That’s it for September. It’s great to see another month above $1000, something that I think will be consistent in these quarter ending months now that we’ve breached the number. The next goal will be to beat my biweekly paycheck(post deductions) in a non December month which should happen within the next few quarters.
December is looming and that’s always a huge month for me as a lot of mutual funds pay out once a year in December including one of my largest holdings. I think the 4.50/hr mark for Steve will be hard to hit unless December is an absolute monster of a month but I’ll keep plugging away and investing as much as I can to make sure I give Steve a good shot at hitting it or at least being quite close.
I’ll see you all in a week for a Portfolio update.
September Total : $1265.09
2016 Total : $3953.99
Portfolio(Steve) monthly hourly wage : $7.59/hr
Portfolio(Steve) annual hourly wage : $2.64/hr