There is something special about starting a brand new year, chasing new goals, and pursuing the dream of growing a stream of passive income to obtain financial freedom and independence. As a result, I love tracking that growing stream of income more than anything else! Every month it grows in size and strength as compounding takes over and becomes a bigger part of that rolling snowball of financial goodness.
Unlike in previous months, I am no longer going to write Lending Club and Prosper updates on a monthly basis. Given the temporal nature of those accounts, I am reducing those updates to once a quarter. If I find that I no longer like the new method, I will revert back to writing monthly updates. Feel free to let me know your thoughts on whether you found the monthly updates helpful. With that, let’s dive right in and check out how my passive income looked in February!
Passive Income and Pageviews:
Blog Pageviews: After January’s slow start, February came roaring in with a nice pop in readership here at WYOR. With my traffic levels spiking to the highest levels ever, I was able to more than double my January pageviews, coming in at 5,228 for the month. This accomplishment was made even sweeter as February is a short month! I’m hoping the momentum continues into March and I’m able to hit an even higher mark. My average daily pageviews for February was approximately 187 per day. Additionally, my overall goal for 2014 is to receive greater than 20,000 unique visitors. This stat must be looked at cumulatively, and for the year to date I’ve had 2,572 unique visitors.
Below is a snapshot of my February blog metrics from Google Analytics.
Lending Club: Ouch, February was one of the toughest months I’ve had with my Lending Club accounts since beginning to invest many years ago. Of course, while still being a major down month, I continued my year-long streak of exceeding triple-digits of net interest income by hitting $119.79 for the month. Looking a bit further into the details, my taxable account had a phenomenal month, hitting $17.67, which is the highest it has been since I’ve tracked the account here on WYOR. Given the age of my Roth IRA, which contains the bulk of my Lending Club dollars, I am sure there will be further challenges ahead as my returns mature. This is entirely normal with peer to peer lending and completely expected given my risk tolerance.
As the end of February, my weighted average interest rates were 17.89% and 15.39% in my Roth IRA and taxable accounts, respectively, giving me the potential for high returns over the course of the next few years. Based on the notes I’ve been recently able to select, I would expect that those two averages continue to trend down as most of the notes I’ve been able to select are averaging in the 14-16% range. For the month of February, my overall internal rate of return (IRR) was 12.20% across both accounts. Not too shabby considering it was a down month. Since inception, my IRR for both accounts are 11.96% and 10.67%, respectively. Lastly, since the start of 2013, my accounts have an IRR of 13.09% 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: As with my Lending Club accounts, February was a tough month for my Prosper account after experiencing my first default since opening the account. Last year was unbelievable, but my risk tolerance for notes is too high for me to continue default free. After a record month in January, my Prosper account was only able to manage $1.99 of net interest for the month. The good news is that my account is now large enough to overcome a default and stay in the positive earnings category. One more reason staying diversified in any investment strategy is important.
At the end of the February, my average interest rate of the notes invested in is 20.69%. Since opening the account in May, my IRR has been 14.32% with the month of February alone returning 1.05%. Ideally, 14% is close to the high-end of what I’d like to see this account return on an ongoing basis
Dividends: February was a superb month for my dividend growth portfolio, and certainly did its part to make up for the lackluster performance in my two peer to peer lending accounts. During February, I received dividend payments from five of my holdings. Those holdings were American Realty Capital Partners (ARCP), Kinder Morgan (KMI), Omega Healthcare Investors (OHI), Oneok Partners (OKS), and Prospect Capital (PSEC). My dividends received for the month totaled $170.64, an increase of $137.25 over the previous year and $24.81 over November’s total. The details can be found below:
- ARCP: $29.09, reinvested into 2.125 shares
- KMI: $50.39, reinvested into 1.489 shares
- OHI: $23.37, reinvested into 0.740 shares
- OKS: $48.70, reinvested into 0.854 shares
- PSEC: $19.09, reinvested into 1.683 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.
Not only are the February, May, August, and November months my highest cycle in general (at this point), but were especially high this month due to ARCP. In February, ARCP distributed a special dividend to investors as part of their finalizing the Cole acquisition. While this was already a rockstar month with dividends received, five of my holdings saw announced dividend increases. These five holdings were Cisco (CSCO), Digital Realty Trust (DLR), Coca-Cola (KO), Lorillard (LO), and TAL International (TAL). So far, eight of my fifteen positions have increased their dividends.
As I’m sure you are aware, I started a no-cost dividend growth portfolio with Loyal3 in January. This past month, my February contributions were invested in three positions, Coca-Cola (KO), McDonald’s (MCD) and Unilever (UL).
When factoring in the dividend reinvestments mentioned above, the dividend increases to my portfolio, and my additional investments, my forward 12-month dividends increased to $1,438.31 from $1,386.00, an increase of $52.31! An investment here, a dividend raise there, and boom, compounding at its finest! I’ve added the below chart to show the both the dividends I’ve received each month and the increases 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:
I like to compare my “quarterly average” of passive income to reflect my growing stream of passive income. For February, this means comparing my three-month moving average to November’s three-month moving average. For February, I had a three-month moving average of $286.00, an increase in passive income by $11.46 over November’s $274.54. I am quite pleased with my continued progress and look forward to tracking this metric as time goes on. As we move forward, each month and quarter will not be as consistent in the progressing, but over time, my gains will be noticeable.
And with that, we’ve reached capped off another passive income update. Without a ton of time or energy my investments earned $292.09 of total passive income for me during the month of February!
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.