Live Off Dividends

Passive Income and Personal Finance

Month: February 2018 (page 2 of 3)

Rental Property Update: January 2018

I’m happy to announce that we’ve finally closed on the three rental properties! It took forever and I’m happy that it’s finally over! There isn’t too much information about the three new properties in this post but next month the numbers will start to fill in. I’m excited to share all the new stuff with you guys. I wrote a post detailing how we acquired the houses, closing costs, etc. You can check that out here if you’d like! I didn’t write a rental property post last month, but all the data is included with this one. The last two months have been great with the property, no issues whatsoever!

For 2017, it cost me an average of $215.85 to own/live in this rental property. To me, that’s great. Especially considering that’s less than my taxes would cost me if this house were a single family and not a two family. Having my first year (almost) as a landlord under my belt, I can say that it’s been great. I collected a total of $7,050 in rent so that’s essentially how much I saved vs. if I had bought a single family home. I paid $60.78 additional on the principal this month, as usual. Next month rent will be increased to $675 so I’m going to put that extra $25 towards the principal each month. I may increase the amount I pay towards the principal later on this year, but we’re negotiating a new contract at work so I’m waiting on a pay raise.

For those of you who want to invest in real estate but can’t afford a down payment or don’t want to worry about fixing things when they break RealtyShares may be a good option for you. It is an online investing platform that allows you to invest in commercial and residential properties with a much smaller investment than would be required to purchase real estate out right.

I started writing these posts with the intention of having the three other properties included within a month or twos time. Given that it took forever to close that simply didn’t happen. Going forward these posts should be a lot more interesting seeing as there will be three more properties included. Here are all my previous monthly rental property updates to date if you would like to catch up!

Dividend Portfolio Update: January 2018

This will probably be my lowest month for dividends this year. I’m adjusting my investing strategy for 2018. I will be increasing my bi-weekly 457(b) contribution from $200 to $795. This will have a dramatic on this portfolio going forward. I won’t be contributing to this portfolio on a regular schedule for awhile. We’re in negotiations for a new contract at my job so when it’s all settled I will be able to contribute a set amount to this portfolio going forward. You can read the post detailing the reasoning behind this change here.

For those wondering how I make free trades and pay no commissions, I use Robinhood for my dividend portfolio. If you want to sign up, use my link and we’ll both receive a free stock valued up to $150!

These are all the companies that paid me dividends in January amounting to $101.19.

I received a whopping $0.09 from dividends in my Roth IRA this month. It’s almost twice as much as last January at least haha.

My dividends year over year in January increased from $35.58 to $101.19. This was a 184.40% increase year over year. That’s an insane increase.

I received a total of $1,578.94 from dividends in 2017. So far for 2018 I’m just at January’s total which is $101.19.

My total annual dividends increased this month from $1,485.59 to $1,569.22, while my average monthly dividends increased from $123.80 to $130.77. This was a 5.63% increase month to month.

This was a huge month to month increase for average monthly dividends. I wish the increases were this large every month.

For those of you reading this post wondering how to get started investing, I have written an ebook that outlines just that. It is called Investing In The Stock Market: The Complete Beginner’s Guide. You can check it out here, or click the picture below.

Purchases:

MO 10 shares at $70.46 for a total of $704.60. 1/3/18

ADM 8 shares at $39.82 for a total of $318.56. 1/3/18

PEP 4 shares at $116.98 for a total of $467.92. 1/12/18

ADM 13 shares at $43.50 for a total of $565.50. 1/26/18

Sells:

No sells this month.

Contributions:

Total: $880.00

Dividend Increases/Decreases: 5 Increases

Realty Income increased their monthly dividend payout from $0.213 to $0.219 per share. This was a 2.82% increase and will earn me an extra $7.35 annually or $0.61/month.

3M increased their quarterly dividend payout from $1.175 to $1.36 per share. This was a 15.74% increase and will earn me an extra $1.00 annually or $0.08/monthly.

Cincinnati Financial increased their quarterly dividend payout from $0.50 to $0.53 per share. This was a 6.00% increase and will earn me an extra $2.52 annually or $0.21/monthly.

Air Product Chemicals increased their quarterly dividend payout from $0.95 to $1.10 per share. This was a 15.79% increase and will earn me an extra $6.60 annually or $0.55/monthly.

Mastercard increased their quarterly dividend payout from $0.22 to $0.25 per share. This was a 13.64% increase and will earn me an extra $0.36 annually or $0.03/monthly.

Together these increases total to $17.83 annually or $1.48/monthly with no additional capital invested.

This chart shows my average monthly increases from organic dividend growth (growth from companies increasing their dividend rather than growth from additional capital invested ). This was my best month to date with $1.48 in organic growth.

Rental Property: $650

I received $650 for rent in January. I raised the rent starting in February to $675/month so that will be a nice little boost for 2018.

I’m still behind 11 contributions to my dividend portfolio totaling $4,840 from when I was injured at the start of 2017. I also haven’t contributed anything to my Roth IRA for 2017 yet, so that’s another $5,500 that I need to come up with by April. I’m going to try to contribute $5,000 to this portfolio this year depending on when our contract gets finalized.

Here are all my other monthly Dividend Portfolio Updates if you want to catch up!

Leave a comment and let me know how January went for you! I look forward to hearing from all of you every month!

My New Investment Allocation

I’ve made some huge changes to where my money will be invested this year. This post will explain what I was doing previously, currently and why I decided to make this change.

Starting Point

For most of you reading this you probably know a little bit about my current allocation. For those of you who don’t I’ll explain a little about it. Until February, I was contributing $440 out of my bi-weekly paycheck to my individual brokerage account, which I refer to as my dividend portfolio. I was also contributing $200 out of each bi-weekly paycheck to my 457(b) . 457’s are similar to 401k’s in that the contributions to these employer sponsored plans are pre tax. I also max out my Roth IRA each year but in a more sporadic fashion, but to keep it uniform it would average out to about $211 per paycheck.

New Strategy

My new strategy is dramatically different. I will be putting $0 into my individual account from my paychecks. This will change when I get a raise in July or when we finalize our new contract, whichever comes first. The new contribution won’t be much from just the July raise, but if the new contract goes our way it could end up being a pretty substantial contribution. Much less than $440, though. I will now be contributing $795 from each paycheck into my 457. This is the most that I can put in to reach the maximum of $18,500. My Roth IRA contribution will remain unchanged, it will still be $211 per paycheck.

My Logic

If you compare the two charts you can see that my total paycheck deduction will only be slightly different. In my old strategy I was “paying” $801 to invest $851. This $50 extra is due to the tax advantages of the 457 account. With my new strategy I will be “paying” $807 to invest $1,006. Again, this $199 extra is due to the tax advantages of the 457.

With my new strategy I will essentially be paying $6 more to invest another $155. That’s a difference of $4,030 per year. For this one change I will increase the amount I’ll invest this year by 4 grand! This will also decrease my taxable income. For example, if you made $30,000 per year and you put $10,000 into your 457 plan, you will only have $20,000 of taxable income, before other deductions of course. So making this change will net me $4,030 more this year as well as decrease my taxable income by $18,500!

This seems like a no brainer and it really is. I’ve always been a little apprehensive to make this change for a few reasons.

  1. My employer doesn’t match any of my 457 contributions. That’s a terrible reason not to take advantage of this account and I now see that.
  2. I wasn’t thrilled about the selection of funds that were offered to us. The tax advantages of this account far outweigh the slightly larger expense ratio than say a Vanguard fund.
  3. My take home pay is going to be significantly less. I believe this is still a legitimate concern but, not a reason to ignore these tax advantages. With my old strategy I could simply choose to skip a contribution if I needed some extra money. With the new strategy, I can cut back my 457 contributions but it won’t take effect immediately. This plays into the importance of having an emergency fund.

 

Another advantage to 457 accounts is that the money is immediately available, penalty free after you separate from your employer. This works out great for those of us working towards early retirement and financial independence. Moral of the story, always question your strategy and make the changes that will benefit you. I think it’s too easy to get stuck in routines and not explore other options. Let me know what you guys think!

Have you guys made any changes going into 2018?
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