Time in the market dividend review – February 2018 – bond yields aren’t terrible now?

Bond yields have continued their rapid ascent to start year. This isn’t a great thing for current bond holders especially if you’re in long term bonds. However, it does mean that bonds are starting to look more attractive to future investors. Luckily, I’m a combination of the two. I have a small allocation to bonds right now and will  buy more in the future. It’s not great to see bond values drop but I don’t mind the higher yield.

There’s an inverse relationship between bond yields and bond price and that has certainly shown itself in recent months. My largest bond holding, the Vanguard total bond index has fallen nearly 2% YTD due to rising interest rates. Bond funds with higher duration have fallen even more. Most of my bond holdings are short to intermediate since I don’t view them as a vehicle for appreciation but one for safety and diversification. My bond allocation is low right now and I have no plans to change it in the near term. As always, I may certainly revisit that if bonds become more attractive again in light of rising rates or if I want to adjust my risk profile.

February is generally a light month for me and this year is no different. The bonus of  rising bond yields is a potential to grow that. That’s due to the fact that I can now buy bonds at a lower price and a higher yield. Recently, my bond allocation has gotten above target with the stock market turbulence. That means purchases of bonds have stopped but I’m sure I’ll return to purchasing bonds again soon.

My dividend employee Steve usually takes it easy in the first two months of the year as he prepares for March. March is a big month for me as a lot of my mutual funds and individual holdings pay out then. I started the year with a low total with $80.14 in dividends in January but it was still a 44% over the previous year. That’s not a bad start in my mind.

Last year’s February came in at $79.60 and was made up of bond dividends and the payout from Apple. I only hold 50 shares of Apple but likely own a lot more overall due to it’s immense presence in every mutual fund and ETF known to man.

Apple has since raised it’s dividend by 10% and my bond holdings have grown in tandem with my portfolio. That means February should see a decent lift this year so let’s take a look.

February Dividends

bond yield dividends

My February total for 2018 comes in at 121.96!

That’s a 53.2% bump over last year. You can see the 2016 and 2017 didn’t change much due to the fact that I wasn’t adding bonds. That changed recently as my bond allocation fell behind the rising tide of the market and it’s clearly seen in the results. I’m certainly not going to complain about a 50%+ bump and am glad to see bonds doing their work. The increase in the Apple dividend helped a bit as well.

Higher bond yields mean lower bond prices but that’s OK for someone like me who’s in the accumulation phase of their life. I’d rather accrue something that’s paying me a reasonable rate than buy bonds that barely pay anything. I also reinvested all my dividend dollars so it just means I’m buying things generating a higher future yield.

One thing of concern as interest rates rise is inflation and that may require giving some consideration to TIPS as a potential bond holding. I’m not making that change yet but will likely consider it if my bonds fall behind again.

$121 doesn’t seem like a huge amount but every little bit counts. I can reinvest all that money and help my portfolio and payouts grow next year. February’s dividends reinvested at my average portfolio yield boost my annual dividend payout by $2.68 or about $0.22/month. That’s not a lot but you let that compound over a bunch of years and baby, you’ve got a dividend stew going.

My dividend employee Steve’s hourly wage was $0.73/hr as he took it easy before the busy season of March comes along.

You can see by the graph below how much of an impact March and the other big months have on his hourly wage and my overall dividends. These small months like February count but it’s March, June, September and December that carry the day.

yearly dividend graph

The goal for this year is to hit $9250 in dividends. It seems like I’m well on my way there with these first two months. $202 YTD means I’m up nearly 50% over last year’s results at this time. That’s great news and I hope to continue that into March. I don’t expect growth anywhere near that level on a big month like that but any sort of improvement will be welcome.

Recent market volatility has pushed prices down. That means my regular monthly contributions are flowing into securities paying higher yields. That’s always good for us long term investors. I still have a lot of cash on the side and will look for any opportunities that seem appealing. Anything that can help Steve out in reaching a difficult yearly target will be appreciated.

After all, you gotta take care of your employees if you want them to be with you for the long term.

Thanks for reading and let me know how your February went. Until next month, keep investing, reinvesting and living well.

January Total : $121.96
2018 Total : $202.10
Portfolio monthly hourly wage : $0.73/hr
Portfolio annual hourly wage : $0.61/hr


30 thoughts on “Time in the market dividend review – February 2018 – bond yields aren’t terrible now?

    1. Thanks Tom. I agree too, it’s always good to have value in other investments although rising yields will probably keep stock returns down. Those have risen in recent years due to the lack of value in alternate investments.

  1. Will be interesting to see the impact of increasing bond yields on overall equity markets. I’m 100% stocks at the moment, and don’t expect that to change in the near future unless bond yields rise dramatically – and they have a long way to go before they even get back to ‘normal’!

  2. Nice overview. I like the portfolio monthly and annual hourly wage rate. That is a great idea.

    Your dividend / interest / passive income distributions are very similar to mine at the moment in terms of frequency.

    Congrats on your progress. Keep at it! – Mike

  3. Congrats mate! Nice dividend increase. About Bonds, as long as you hold it to maturity the depreciation in price should not impact you. However, inflation might eat into your yield.

    1. That’s true but it doesn’t help if you’re holding to maturity at a very low yield and now the yield is 2% higher.

  4. I wouldn’t consider this as a small month by my standards! It looks like Steve’s development is outstanding if he managed to improve his performance by 50%. I would love to have such an employee…
    Keep it up and congrats on a nice month!

    1. You’ll get there eventually, I was mostly in the single digits in most of these months last year and the growth y/y is pretty large once you get to a certain point and keep pumping money in each year. The first few years are definitely the slowest.

  5. Awesome report for February TITM. I’m hoping to get to 3 digits myself sometime this year. Currently, I don’t own any bonds. I am 100% invested in stocks or index funds. The main reason is that I have a long term horizon. I figure that when I get closer to retirement, I’ll be able to take a more conservative approach, but until then, i’ll be aggressive with stocks all the way. Interesting read though. Your yearly goal is an impressive one!

    1. Makes sense DP, I have a pretty long term horizon myself but enjoy the diversification/ability to rebalance even a small allocation to bonds ads.

  6. Good post. Bonds are still a bit of a mystery to me, and you have done a good job of explaining how they work. Higher yields are a welcome return to normalcy in my view, even if the rise in stock prices is dampened for a bit. Love the concept of “Steve’s hourly rate!” I’m looking forward to seeing how your portfolio performs this year.

    1. Thanks – I might do a larger post on bonds if I have the time in the future. They’re definitely a good part of a portfolio.

  7. Terrific start to the year! I didn’t go into bonds at all for the same reason as Frankie but I did go about 1.5% into short term CDs to wait out volatility (and now perhaps tariffs).

    1. Capital 360 now has a 1.5% savings account. It’s nice to see those savings rates creep up again although it’s still below inflation!

  8. Really love your graphs and effort in tracking your dividends. Looks like the next few months will be big for you.

    I was wondering how you calculated that portfolio wage right down the bottom of the post. I quite like that idea.

    1. I just base it on a 250 day business year with 8 hour days. The calculation is something like dividends/250/8 X 12 for the monthly hourly wage.

  9. Having 50 individual share of AAPL you go TITM! I’m hoping for a nice increase from them this year. Good Luck to you and good luck to Steve!

    1. We’ll probably see another 10% bump as usual! I’d hold more Apple but I already have so much exposure via my ETFs and mutual funds that 50 shares is probably enough.

  10. Great month for dividends. Keep up the great work, I like your yearly goal for this year. Its very impressive.

    Yes, Bond yields are rising up. I don’t have any exposure to bonds yet but if the yields keep going up, i will definitely be buyer at the time. Time will tell but for now I have only equity on our portfolio.

    Good Luck,

    1. It’s nice to see them going up from an income perspective. Most of my holdings are short term right now so the yield bump isn’t impacting me a lot from a price level which is nice. I see bonds as a hedge against losses so I try to keep my exposure to losses on that end low via short term or mid-term holdings.

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