Dividend and Expense Updates

Time in the Market dividend review – March 2018 – mutual fund dividends

It’s March and that’s good news for those cool cats with a lot of mutual funds or ETFs. Mutual fund dividends are back on the menu as the quarter wound to an end.

It’s time for most funds to payout accumulated dividends for the quarter. This mutual fund or ETF payout schedule is familiar to many investors. We know that while our January of February dividend months may be light; March is coming up with a big payout. That’s just how mutual funds usually work.

Funds are required by law to pay out income at least once a year. There are funds that follow that bare minimum and pay out once a year. The goal for those funds is to minimize admin costs while maximizing that one payout. There are also other funds that do it semi-annually.

However, it’s most common to see a quarterly payment schedule. The reason for that is that it allows a level distribution while being more regular than annual payouts. Monthly payments do exist but they can be irregular, costly to administer and as such aren’t overly common in mutual funds. Quarterly payments offer a middle ground of administrative costs between monthly and annual payments too.

Most mutual funds hold hundreds of securities that have different payout dates. That means a monthly payment may be rather uneven month to month while a quarterly payment is more predictable and substantial.

Personally, most of my money is in mutual funds or ETFs. That means mutual fund dividends make up a good portion of my income for the year. As such most of my income comes in these quarter ending months.

I do hold some individual securities as well but most of them also happen to pay in the same time frame. Over 91% of the $8300 in dividends I had last year were paid out in March, June, September or December.

That means that these months are important if I want to hit my 2018 dividend goals. I’m just north of $200 in dividends year to date which is well below my $9250 bronze goal but I’ve still got those four big months ahead of me. That’s especially true of December which includes any of those annual payers and is generally the biggest mutual fund month of the year.

Related2018 annual goals – the financial goal Olympics

We’re still a long way away from December and seeing if I hit that goal but March is now behind us. That means I can finally look at my first big month of the year and see how much growth I’ve seen versus last year. My portfolio has certainly risen quite a bit and I’ve put a lot more money into the market since last march as well.

Dividends are paid out per share so in order to grow dividends, one has to get more shares. That means putting more money to work and reinvesting any dividends you may get along the way.

Last year’s March total came in at $1250.80 so that’s the starting point to compare against this year. I’m expecting that number to improve a bit this year so let’s take a look.

March Dividends

mutual fund dividends

March’s dividend total comes in at $1617.41!

That’s a 29.3% bump over 2017 which is huge! It’s an even bigger than the increase I saw last year(26.7%). That’s pretty cool since it’s always harder to grow on a % basis as the numbers get bigger.

One of the key parts of the compounding effect that we all love is reinvesting dividends. It’s always nice to have more dividends to reinvest especially when the stock market is taking a pause.

From a psychological perspective, It’s sometimes easier to stomach any short term fluctuations when you know dividends are flowing in and getting you more shares than they would have it the stock market was rising. That means more dividends in the future!

These large dividend months are great for generating more future income. March’s income gets reinvested into more shares and will improve my forward dividend income by $36 or $3 per month. That might not seem like much but every little bit helps when it comes to generating big y/y increases like this one. You reinvest and suddenly that reinvested money generates more dividends next year and the cycle repeats.

That’s the dividend snowball that everyone loves. You get dividends which get you more shares which generate more dividends. It may start small but gets bigger through the years.

Steve, my dividend employee took it easy in the first two months of the year in preparation for March. Steve’s hourly wage for the month was a respectable $9.70. That brings his annual wage YTD from $0.61/hr to $3.64! Not a bad boost Steve.

Related My dividend employee Steve

Overall, the results have been great so far this year as evidenced by the graph below.

march dividends

2018 is definitely off to a great start and we’ve still got the biggest months of the year ahead of us.

The next two months are going to be lean on the dividend side although I still expect decent growth due to the recent addition of more bond funds and improving yields there in general. Since it’s the end of the quarter, let’s do a quick quarterly review to better visualize y/y growth since the graph above is so dominated by the large months.

Quarterly Dividend Review

quarterly dividends

Q1 dividends come in at $1819.51. That’s a growth rate of 31.2% against last year. March was great but January and February were up 44% and 53% respectively. These are much smaller dollar months so it’s much easier to grow a lot on a % basis.

Still, it’s nice to see growth of 30% this year after only growing 17% in the same quarter last year.

I think it shows that my recent success in hitting a high savings rate has helped these results in a big way.

Related :  February 2018 savings rate report

You can also see that the big quarters are still ahead especially the last one of the year.

I’m not expecting a 30%+ growth rate in these latter quarters since those were already much higher last year but seeing Q2 above $2000 would be really nice. It would go a long way in helping me hit my bronze goal of $9250 or even beating it.

Steve’s quarterly wage is up a bit too following the pattern above.

dividend employee

Steve’s biggest months are ahead but Q1 isn’t bad at all.

We’ve now got every quarter above $3 and might be hitting $4+ starting with the next quarter.

Steve didn’t start off so hot only making $2.35 in the first quarter I tracked but he’s certainly getting himself raises that are killing inflation.

We’re still well below minimum wage so Steve can’t quite retire yet and live off his income. However, if he gets a few more raises like this one then he’ll be doing quite well for himself in a decade or so. Steve’s in this for the long term and we’re in the early stages of this marathon.

Overall, this was a great month for me. I’m super excited to see such big growth in March and this quarter overall and that certainly bodes well for the year.

My portfolio may have had some volatility recently but the dividend payments are growing and making it much easier to stomach that. I’ll take a few quarter ending months at lower prices when I can get them because that’ll only help my long term returns.

After all, this is a long term game so short term price fluctuations don’t matter. Keep investing, keep reinvesting and watch as the dividends grow.

Thanks for reading and let me know how your March results looked.

March Total : $1617.41
2018 Total : $1819.51
Portfolio monthly hourly wage : $9.71/hr
Portfolio annual hourly wage : $3.64/hr


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.