While the last four months have been quite the whirlwind, I haven’t stopped investing, nor continuing my pursuit of growing my passive income. Catching up on my missed monthly updates!
As a spreadsheet lover, I keep multiple spreadsheets tracking various metrics and other performance aspects of my dividend growth portfolios and peer to peer lending accounts (Lending Club and Prosper). My monthly updates represent the highlights from those spreadsheets, and provide me a great opportunity to summarize the previous period, review my activity, and check my progress towards my annual goals. So, without further ado, let me start my catching up process with April, the first month after my wedding induced break!
Passive Income and Pageviews:
|Unique Visitors (Users)|
Blog Pageviews: Given my regular posting stopped a week or two into April, I expected my pageviews to begin to dip shortly thereafter. Readers need something new to read, and without posts coming regularly, traffic will fall! So, after my high in March of 7,094, my April pageviews slipped to 6,605. My appreciation and thanks go to everyone who stopped by during the month, read my posts, commented, and to those who have linked my articles and shared my posts. My average daily pageviews for April was approximately 220 per day, an decrease of 9 from March.
My secondary traffic goal for 2014 is to receive greater than 20,000 unique visitors (now ‘Users’). This stat must be looked at cumulatively, and for the year to date I’ve had 6,912 unique visitors.
Below is a snapshot of my April blog metrics from Google Analytics.
Lending Club: Restraining my expectations with my Lending Club accounts is difficult, given how long I’ve been investing in peer to peer lending. However, even with that experience, it always comes as a shock when things aren’t going as I thought they might. This isn’t to say that things haven’t been successful, but instead is a reflection of my regression towards the mean. What does that mean? As Lending Club constantly updates their underwriting for new notes and my existing investments mature, the result is a compression in overall interest rates for my criteria and the natural increase in underperforming loans results in a bit of a rollercoaster on the net interest front.
Am I still happy to be participating in this exciting and dynamic asset class? Absolutely. In fact I added $300 to both my taxable Lending Club account and Prosper account in April.
So while back in March I dipped below the triple digit mark for Lending Club, my accounts jumped back above that mark in April with $113.81 of net interest. With my Roth IRA’s average note age hitting 11.4 months, this account should be stabilizing, although (now in hindsight) a bumpy ride is still possible. Sneak preview, May was not so friendly! Again, while disappointing at times, the bigger picture is that I am still earning a double digit interest rate for my investments. Any fluctuations in the performance of the accounts is entirely normal with peer to peer lending and completely expected given my risk tolerance.
For the month of April, my overall internal rate of return (IRR) was 10.42% across both accounts. Since inception, my IRR for both accounts are 11.38% and 10.79%, respectively. Lastly, since the start of 2013, my accounts have an IRR of 12.54% combined. Not bad for an alternative, passive income producing investment!
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 December and Year-End Lending Club update.
Prosper Marketplace: Much like the up and down ride I’ve experienced with my Lending Club accounts, Prosper has seen similar swings in monthly net interest as the account matures. Experiencing my second default of 2014, I earned $8.39 of net interest in April. The good news is that the account is now large enough that a single default will not outweigh the amount of interest income received in a month. Generally speaking, this is a good measure for baseline diversification in the number of notes a peer to peer lending account contains. As of the end of April, my account contained 107 notes, with an average age of 6.9 months.
Since opening the account in May of 2013, my IRR has been 13.89% with the month of April alone returning 4.41%. I expect to be in the 13-14% range for an overall return on a long-term basis.
Dividends: The January, April, July, and October dividend months are my lowest of quarterly cycle that most dividend stocks operate under. Even with fewer payouts during these months, I still received dividends from five different positions. Those positions were American Realty Capital Partners (ARCP), Cisco (CSCO), Coca-Cola (KO), Philip Morris International (PM), and Prospect Capital (PSEC). My dividends received for the month totaled $76.04, an increase of $9.16 over the previous year’s total. The details can be found below:
- ARCP: $14.91, reinvested into 1.121 shares
- CSCO: $9.93, reinvested into 0.423 shares
- KO: $11.76, reinvested into 0.305 shares
- KO: $0.65
- PMI: $19.22, reinvested into 0.229 shares
- PSEC: $19.48, reinvested into 1.787 shares
As with previous months, I am directly reinvesting all my dividends until my annual dividend income falls between $2-3,000 per year, allowing me to reinvest more selectively a few times per year. This of course is always subject to change. For the dividends in my Loyal3 Portfolio, like the smaller KO dividends above, they will be selectively reinvested and combined with additional contributions monthly.
After starting a no-cost dividend growth portfolio with Loyal3 in January, I’ve made $300 purchases each month and plan to continue this through the end of the year. This past month, my April contributions were invested in two positions, Mattel (MAT) and Target (TGT).
In my taxable dividend growth account, I sold my Oneko Partners (OKS) position and diversified into General Electric (GE), Meredith Corporation (MDP), and Ensco (ESV). I sold this position for two reasons. First, was my desire to simply future tax years by avoiding the K-1 generated by investing in a master limited partnership (MLP). As a small, individual investor, I am unable to take the depreciation generated losses on my tax return, thus putting me in a situation where those losses get deferred until I sell the position. Second, was to diversify some of my relatively limited holdings across some other positions that should provide long-term dividend growth.
When factoring in the dividend reinvestments mentioned above, the net effect of my exit from OKS and into GE, MDP, and ESV, as well as my additional investments, my forward 12-month dividends decreased slightly to $1,453.18 from $1,455.71, a decrease of $2.53. I’m happy with the change, given I’ve expanded my holdings by four different positions and diversified my dividend income stream.
I’ve added the below chart to show the both the dividends I’ve received each month and the net change in forward 12-month dividends. I’ve changed the chart below to track the growth since the start of 2013, and will return to a rolling chart once I have two years of data.
Passive Income Summary:
I like to examine the cyclical nature of my passive income due to timing. Smoothing out the trends of income is important to me, so finding a good means of doing this was something I worked on before deciding to do a three-month moving average. This will allow me to see my growing passive income stream while helping to erase the swings in timing from dividends and the somewhat choppy nature of peer to peer lending. Of course, this won’t insulate me completely from swings, but should smooth things out nicely!
As with the dividend chart above, I am going back to showing this chart from the beginning of 2013. Once I get two years of data, I will then showing it on a rolling basis. The chart below shows both my three-month moving average and the individual income from each of the underlying investments:
As you can see above, things are not trending in the right direction! This trend is primarily the result of my maturing peer to peer lending accounts producing less income as defaults and late notes get factored in. Fortunately, this should smooth out over this course of the year and things should go back to increasing as the year goes on.
Even with that, I like to compare my “quarterly average” of passive income to reflect my stream of passive income. For April, this means comparing my three-month moving average to January’s three-month moving average. For April, I had a three-month moving average of $244.44, which is unfortunately a decrease in passive income by $47.63 over January’s $292.07 (my highest three-month average).
And with that, we’ve reached capped off another passive income update. Without a ton of time or energy my investments earned $198.24 of total passive income for me during the month of April!
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 all my monthly updates and incremental progress towards my 2014 goals on the Goals page.