Passive Income – August 2013 Update

Passive Income - August 2013 Update - Boat in Water

Please note I understand August wasn’t yesterday! Just getting all of my updates into place from this past summer! Just a couple of months to go!

My favorite post of the month is my monthly passive income update as it shows each month how I am getting a step closer in developing enough streams of passive income to supplement my working income and achieve financial independence. Before we check out July, remember that I updated my 2013 goals after tweaking my priorities, but still focusing on growing my passive income. Now let’s check out August and see how things turned out!

Passive Income:
2013 Goal
Percentage of
Annual Goal
Lending Club

Lending Club: August saw my net interest from Lending Club stay steady with July as the interest received continues to be offset with defaults and charged-off loans. At this point it is safe to say my expected net interest from Lending Club should stay in the $120-150 range, depending on defaults and charge-offs. I can’t really complain about consistent and compounding triple digit net interest income.

As the end of August, my weighted average interest rates were 18.00% and 15.05% in my Roth IRA and taxable accounts, respectively, giving me the potential for high returns over the course of the next few years. I would expect that those two averages begin to move towards one another as the loans I’ve been able to select are averaging in the mid-17% range. For the month of August, my overall internal rate of return was 13.71% across both accounts. As I said above about the net interest received, I can’t complain about an annualized return north of 13%.

Important to understand, I calculate my monthly net interest amount to be interest received less any charge-offs, defaults, and services fees in the given period. If you haven’t yet, check out my full August Lending Club update.

Prosper: August continued the consistent performance in my relatively young account with Prosper, my newest peer to peer lending account. During August this new account earned $17.89 of net interest income. At the end of the month, my average interest rate of the notes invested in is 21.63%. I am really making great progress on my 2013 goal of $120 in net interest from Prosper. The additional investments made in August should only help out in hitting that goal. If you haven’t yet, check out my full August Prosper update.

Dividends: During August, I received dividend payments from three of my holdings, Kinder Morgan (KMI), Oneok Partners (OKS), and Prospect Capital (PSEC).  My dividends where the highest they’ve ever been, totaling $118.03 for the month, are detailed below:

  • KMI: $36.21, reinvested into 0.973 shares
  • OKS: $46.70, reinvested into 0.958 shares
  • PSEC: $35.12, reinvested into 3.155 shares

Other than the dividends received, August was a very active month with equity transactions. I sold all of my Intel position because of the missed dividend increase and half of my Cisco position during the month while reinvesting the proceeds in American Realty Capital Properties, Omega Healthcare Investors, and TAL International. To see the full details of most of my August trades, please check out my recap post.

When preparing my recap post, I forgot to add my acquisition of Philip Morris (PM) right at the end of the month. Looking to add diversification to my tobacco and consumer staples, weakness in stock price gave me the entry value I was looking for to make a purchase. As a result, I was able to purchase 20 shares of PM for $1,699.95, giving me a cost basis of $85.00 per share. Given the dividend rate at the time of purchase of $0.85 per share, this purchase increased my forward twelve-month dividends by $68.00 and gave me a yield on cost of 4.00%. However, shortly after making my purchase of PM, they announced an increase of $0.09 per share, bringing my total quarterly dividends to $0.94 per share. This increased my forward twelve-month dividends by an additional $7.20.

When factoring in the dividend reinvestments mentioned above and the various equity transactions and dividend increases, my forward twelve-month dividends increased to $1,187.30 from $989.39. This represents an increase of $197.91 and brought me just shy of hitting $100 per month average in dividends.

Passive Income Summary:

August saw me make a lot of progress towards achieving my updated 2013 goals. Given the larger amount of dividends received and solid returns with my peer to peer investments, I was able to knock out approximately 10.5% of those goals in one month. As you can see below, my passive income rebounded nicely from July’s dip. Going forward, it can absolutely be expected that there will be dips on a monthly basis as dividends are not received on a regular basis. Because of those dips due to timing, I have added a trailing three-month average (TTMA). This will smooth out and better reflect the growing stream of passive income I am generating. My August TTMA was $249.79, and increase of $10.85 per month over July.

Passive Income by Month - August 2013

And with that, we’ve reached capped off another passive income update! Without a ton of time or energy my investments earned $271.36 of total passive income for me! What types of investments have you found successful in generating a consistent and increase level of passive income?

Don’t hesitate to look around; you can find details on the various aspects of my passive income pieces under their respective pages, Lending Club, Prosper, and Dividend Growth. Additionally, you can find all of my monthly updates under the Passive Income Updates page, and progress on my 2013 goals on the Goals page.

If you haven’t yet, be sure to follow me on Twitter, and like me on Facebook!

Flickr: grinapple

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  1. Congrats on having a personal best month of dividends! Looks like you were pretty active in August. I’ve been much more active than I expected over the past 2 weeks. I’m looking forward to getting to find out where you stand now. I actually like getting all of these updates in such a short time as it’s a condensed version of your progress. Keep up the good work!

    • August was definitely a busy month, and unfortunately things slowed down there after as I kicked into house buying mode and put some additional capital to work in my P2P lending accounts. You have definitely been active pretty lately, but that isn’t to say it is a bad thing. There is always a good deal out there, just a matter of finding the right one.

      I’m glad you are enjoy the rapid fire updates. More to come as I try and get up to speed prior to the end of the year. Thanks for stopping by and reading!

  2. W2R,

    Nice month! Great dividend tally. You hit your highest monthly total so far, and now you’re on pace for just about $100 per month going forward. It’s onward and upward! Keep it it up. :)

    Best wishes.

  3. Looks good. I imagine it must be a lot of work to go back and post all the missed months! I’m glad you’re back and taking the time to document everything.

    I have been thinking about switching up my LC strategy as I’m having problems getting money invested (however the results have been great so far). I’m going to read all your LC posts to learn a thing or two.

    • Thanks CI! It actually hasn’t been too bad since I keep very detailed tracking spreadsheets offline. I love tracking investments, especially my own, so it is more a time commitment to compiled the data into posts.

      I’ll have to go back and double check your strategy, but at this point, the best results will come from logging in around the release times. Notes generally show up about 1-2 minutes after 6am, 10am, 2pm, 6pm Pacific time. Jump on and you’ll find ample selection (most of the time). Also finding a broad and simple filter helps as well. I’ll send you an email with my simple filter (what I’m actually using currently).

      Thanks for stopping by and commenting CI!

      • The main problem is that I don’t like to check on my investments all the time, especially LC. Sometimes I might go 2 weeks without logging in. I think I’m going to allow for more loan purposes and maybe drop employment length by a year. I think I’ll try loan purposes first and see how that goes!

        • Be sure to check on Nickel Steamroller to see how any changes might affect your returns. Backtesting isn’t a guarantee, but it can give you a better idea of what kind of returns you might be able to achieve.

  4. Now that’s a graph I’d like to see! Nicely edging upwards! Congrats!


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