Passive Income and Pageviews – April 2014 Update

Passive Income and Pageviews - April 2014 - April Showers

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:
 
April
Year-to-Date
2014 Goal
Percentage of
Annual Goal
Lending Club
$113.81
$466.63
$1,950
23.93%
Prosper
$8.39
$74.57
$400
18.64%
Dividends
$76.04
$449.05
$1,650
27.22%
Total
$198.24
$990.25
$4,000
24.76%
Blog Pageviews
6,605
21,452
100,000
21.45%
Unique Visitors (Users)
2,505
6,912
20,000
34.56%

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.

Passive Income and Pageviews - April 2014 Blog Pageviews

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 and Pageviews - April 2014 - Dividends Received and Foward 12-Month Dividends

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:

Passive Income and Pageviews - Passive Income Since January 2013 - April 2014

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.

Flickr: Thomas

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Comments

  1. Nice update Adam. Glad to see you’re still celebrating p2p as well as coming into a more graduated feel for it.

    • It is interesting given my long-term expectations have been well defined by my taxable account (over five years old) that I am still adjusting to any expectations with the IRA account. I believe that this is partially due to the higher rate of return this account generated in its first year of existence, pushing my expectations higher as a result.

      Thanks for stopping by Simon!

  2. Thanks for publishing your recent financial and blog figures with us. You are definitely setting up a nice passive income stream with your lending and dividends coming in. I know you plan to add more stocks to your dividend portfolio, as you mentioned, and I would suggest looking at higher dividend growth stocks rather than focus on current yield. How is monetizing your blog coming along?

    • Not a problem DH! I am planning on posting my May-July results over the next couple weeks to bring me back up to current. My current focus is expanding my bucket of holdings in the Loyal3 account as a means for immediate diversification until my capital is more readily available for purchases in a traditional brokerage account. I would anticipate getting back to those “normal” transactions in the next few months. During that time I will be exploring all ranges of holdings. My current watchlist is topped by DE, GE, IBM, and V. All are lean on the growth side of the equation as opposed to current yield.

      As for blog monetization, I am certainly not bringing home the bacon just yet, but I am covering the cost of hosting and then some. I believe next year will likely be a year I put more emphasis on monetization, provided my ability to keep writing is consistent. Appreciate you stopping by and commenting!

  3. Nice dividend figures! I did my annual passive income update recently. I’m sorely lacking in P2P. Don’t like people welching on debt!

    • I saw your update Sam, and think the rental of your primary residence is/was a brilliant move that will certainly give you a steady, long-term stream of income that can be leveraged into additional forms of income. As for your P2P lending, it might be time to step back and manage it like a portfolio instead of a hobby. Individually picking notes is laborious, and will only limit your ability to invest. Defaults will be a part of the process no matter what risk level you are invested in, they will occur. So maximizing your passive income will be best served by removing the manual oversight and adding some additional capital.

      Thanks for the comment and stopping by Sam!

  4. Glad to have you back and writing again. I hope the trend of the last few months reverses for your passive income. How’s married life treating you?

  5. Glad to have you back and writing again Adam! I look forward to future posts from you.

    I’m still working on building my portfolio with Loyal3, and have added more to BRK.B. While it is not a dividend stock, I like the fact that it will grow and I treat it more as a mutual fund.

    My LC returns are 10.58% at this time, and my Wife’s “safer” Prosper account is 6.59%.

    With the Prosper account, we only buy A and B notes, 36 month, $25.00 each while it is in the growth stage.

    We add capitol to each of those accounts each month.

    Ray

    • Thanks Ray, your support is appreciated!

      BRK.B is not a bad place to drop some capital, and I think you will be rewarded for doing so. I am kicking myself for not loading up on some back in January/February when it was down around $110 per share!

      Those are some solid P2P Lending returns, and should provide a great stream of income as you continue to grow the accounts.

      • Thanks Adam!

        I am quite happy with the LC account so far, the account has been open about 19 months now. The Prosper account has been open about 3 months.

        I am using Automated Investing with LC with a decent filter that is restrictive. At platform release time, usually I only get 10 to 15 notes to choose from, but that’s cool for me. Rather safer than sorry and I am pleased with the results. To date, my charge off rate is less than 1%.

        My LC account is to the point now where I really need to consider a Roth IRA with them. The income train has really started to roll here and it picks up speed on a weekly basis. I just hate to pay the income taxes! Further consideration is needed as I started this account as a “play money” account. Well, it has turned out very well for me so far, so I may need to make a move like this.

        BRK.B – I plan just to keep on DCA-ing into this stock. A long term holder is my thought right now. I will just keep throwing money at it and see where it ends up. Not sure what will happen with Buffet steps out of the picture, but for now, I try and pick up as much as I can…

        I hope marriage is treating you well so far!

        –Ray

        • Taxes are certainly a consideration for Lending Club and Prosper taxable account holders, however, I have not found to be unbearable, or something that changes how I view the nature of my overall returns and risk/reward calculation. Certainly a decision only you can make.

          I love Buffet and don’t think you can go wrong with picking up some shares. Should be a nice holding, even after he departs.

          Marriage is great, thanks for asking! Enjoy the rest of your weekend.

  6. Nice results! It is tough dealing with the charge offs but nice to see you are taking it in stride. The rewards can be nice though. I have been putting money in Lending Club for just over a year and am starting to see some notes going bad. Like you, I am very happy with the results and am sticking with it. The next year should be interesting as my account matures and defaults start to become more common place.

    How has your experience with Loyal3 been? I am thinking about signing up.

    ~ISP

    • Stick with it and enjoy the ride. Understand that your overall performance will fluctuate, but given the size of your portfolio, you shouldn’t have any issues enjoy positive returns for years to come.

      My experience has only been great with Loyal3. Check out this post for more information on Loyal3 and some possible DG investments available. I’d highly recommend checking them out!

      I appreciate you stopping by ISP!

  7. Nice progress. P2P leaning is an interesting concept, too bad we don’t have that here in Canada.

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