Passive Income – July 2013 Update

Passive Income - July 2013 - Summer Sun

Please note I understand July wasn’t yesterday! Just getting all of my updates into place from this past summer!

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 July and see how things turned out!

Passive Income:
2013 Goal
Percentage of
Annual Goal
Lending Club

Lending Club: July saw my net interest from Lending Club dip from its highest level as my first loan charged-off. I am really quite pleased to have still earned $136.68 even after losing that first note. Who doesn’t love a nice, consistent triple digit net interest number?

As the end of July, my weighted average interest rates were 18.02% 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. For the month of July, my overall internal rate of return was 14.01% across both accounts, which is fantastic considering I had that charged of note.

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 July Lending Club update.

Prosper: July was my second month with net interest earned at Prosper, my newer peer-to-peer lending account. During July this new account earned $17.21 of net interest income. At the end of the month, my average interest rate of the notes invested in is 21.60%. My updated 2013 goal for my Prosper account will be a stretch, but I think it is doable provided I make some additional investments. If you haven’t yet, check out my full July Prosper update.

Dividends: During July I received dividend payments from two of my holdings, Cisco (CSCO) and Prospect Capital (PSEC).  My dividends, totaling $51.91 for the month, are detailed below:

  • CSCO: $17.14, reinvested into 0.663 shares
  • PSEC: $34.77, reinvested into 3.144 shares

In addition to the dividend payments from these two companies, I sold roughly half, 157 shares, of my position in PSEC, losing over $207 in forward twelve-month dividends. While this obviously had an adverse affect on my overall forward twelve-month dividends, I gained diversification by reinvesting most of the proceeds into 30 shares of Digital Realty Trust (DLR).  I sold this half to limit my exposure to PSEC, which as a high yielding business development company, is a riskier dividend play. I do like the company, and am looking forward to continuing to reinvest those dividends for the near future.

My DLR purchase was for $1,709.70, an average cost basis of $56.99 per share. Based on the annual dividend payment of $3.12 per share, this purchase has a yield of 5.47% and adds $93.60 of income to my forward twelve-month dividends. I made the purchase in DLR to gain REIT exposure at what I thought was a good value. [Needless to say this purchase doesn’t look wise as DLR has been crushed four months later].

With the dividend reinvestments mentioned above, the sale of half of my PSEC position, and the acquisition of DLR, my forward twelve-month dividends actually decreased to $989.39 from $1,098.78.

Passive Income Summary:

In looking at July, I continued to progress towards my updated 2013 goals by achieving approximately 8% of those goals in one month. As you can see below, my passive income by month has been increasing nicely, but took a dip in July for two reasons. First was the hit in net interest income from the charged-off loan, and second, July is traditionally a low paying month for dividends, and for me this was no different. That being said, I am pleased and am looking forward to seeing how things continue to progress from here.

Passive Income by Month - July 2013

That’s it for my July passive income update! Without a ton of time or energy my investments earned $205.80 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 the brand new Dividend Growth page. 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: Nikos Koutoulas

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