It’s dividend update time! The summer months are near and the calendar has turned to a new month. That means it’s time to look back at May and see how things went on the dividend front. There has been a lot of talk about rising rates in recent months. One of the nice side effects of that is that money market yields follow suit. That only matters for those of us holding cash in our portfolio. However, it’s nice to be able to get a few extra bucks from those holdings.
Money market yields have been near 0 for quite some time. That’s cause the fed kept interest rates super low. Now, that Mr. fedperson is raising rates, savings and money market yields are on the rise. I’ve been holding a bit of cash recently and have been getting a very low return on that money. That’s changing as money market yields aren’t too terrible right now.
For example, cash in my Fidelity account now yields ~1.4%. Vanguard is yielding near 1.8% due to a lower expense ratio. That means decent things for my dividends as those payouts are a big jump from what I was getting last year. I don’t hold a ton of cash but any boost is helpful!
On top of that, rising rates mean higher bond yields as well due to a drop in prices and a jump in distributions. The consistent growth in stocks in the past few years led to me buying more bond funds which were suddenly underweight in my asset allocation. That might lead to these off months seeing a surge in payouts for the foreseeable future when compared against last year.
I don’t own a ton of individual stocks and those that I own either don’t pay dividends or at the same time as my mutual funds. Apple is the only one that breaks that mold. It had a payout this month and that came with a dividend bump too.
All of these things combined might mean that May might actually be interesting. These off-months will never be as great as my quarter ending months but I’ll take any boost I can get. June is definitely the month to look forward to as all the mutual funds and ETFs pay there. That means a huge month is upcoming and one that will dwarf what I see in May. However, if I can keep growing these off-months at a strong clip, their impact will be bigger each year.
January, February and April grew at 44%, 53% and 59% respectively. Those are some great growth rates even if the starting point is a lot smaller. Hopefully, May can continue that trend.
Last year’s May came in at $91.74 so let’s see how much that grew this year.
May’s dividend total comes in at $175.73!
That’s a big 91.5% jump over last year. It’s awesome to see an off-month grow so much and continue my trend of $100+ months. Maybe I’m in a spot where it’ll be $100+ months going forward all the time. It’s like I’m Blake Carrington with all this money!
This growth really shows the power of continued investing. My overall bond holdings on a share basis are growing as my portfolio grows and stocks keep performing well. That means better monthly dividends on that front. On top of that, growing money market yields mean I’m finally getting something for the cash I hold while I wait for good individual values. These cash yields were close to 0 for so long so it’s nice to see them move a bit higher.
Compounding is a huge part of long term growth too. $175.73 re-invested at my average portfolio yield gives me an extra $4.04 annually or $0.34 per month.
Steve, my dividend employee boosted his productivity a bit while he prepped for his big month in June. Steve’s hourly wage this month was $1.05/hr. That takes his annual wage down to $2.52/hr. That number will jump once we get June in there but it’s far from a livable wage right now. One day you’ll get there Steve!
Related : My dividend employee Steve
Overall, this year looks really good so far. I believe I’m well on pace to hit my 2018 goals due to the rising yields and continued contributions. UNH, one of my largest holdings is due to announce their yearly dividend bump. I’m hoping it’s close to the 20% bump shareholders got last year.
I’m already above $2,000 for the year and I was barely north of $1,500 this same time last year. YTD growth right now is 36.1% and I’m eager to see how June looks. It’s great to see such solid year over year growth numbers which really speaks to the power of putting money into the market.
You can see by the graph below that the big months especially December are still to come too which is exciting.
I’m not sure June can come anywhere close to the 36% growth rate I’ve had so far since the starting point is so much bigger but any growth would be welcome. One of my larger holdings that typically pays once a year in December made a small payout in June as well last year and I’m not sure if that will happen again this year. If not then the growth rate may be a bit more muted than it was last year.
Still, I’ve kept pumping money into the market and will continue next month so we’ll see where I end up.
Thanks for reading and let me know how your May went this year.
May Total : $175.73
2018 Total : $2102.80
Portfolio monthly hourly wage : $1.05/hr
Portfolio annual hourly wage : $2.52/hr