Passive Income Made Perfect – January ’15 PIMP Update

Passive Income Made Perfect - January 2015 PIMP Update - New Year January

Here we are, just over one month into this great new year of 2015. The goals are large, the passion intense, and the new moniker sexy. That’s right; this is now the PIMP update. Passive Income Made Perfect. What does that mean really? Passive income is what we all are striving for, money that’s being made without another hour of work. The effort is put in up front, but the rewards will last a lifetime. ‘Made Perfect’ is really a different take on this efficiency of passive income. Whether you’re a dividend growth investor or a good old fashion Boglehead, the point is your passive income is made perfectly, without another real ounce of effort on your part.

So, now that we’re in the PIMP mindset, lets’ see how January turned out.

January Passive Income and Pageviews:

Passive Income Made Perfect - January 2015 PIMP Update - Passive Income Summary

Blog Pageviews: Here we are, back into record setting territory for Write Your Own Reality. After the slowdown in December, things roared back with a vengeance here in January, crossing the 9,000 pageviews mark for the first time. In hindsight, perhaps I wasn’t ambitious enough with my annual goal? Bottom line, this goal is really a credit to the great readers and blogging community members who’ve commented, shared, and inspired me to keep on trucking along.

Passive Income Made Perfect - January 2015 PIMP Update - Google Analytics

The second blogging goal up there is more for me as I work to provide some consistency and regular content. The past two years I’ve taken breaks, one after I got married, and the other when life just got plain crazy. It goes without saying, I’m going to 12 months of posting activity, and don’t see any reason to stop there! If you missed it last week, I shared that the blog is now another year older, crossing the 2-year mark on the 4th of February.

This past month I was able to publish six posts, which are listed below. The ‘Bonus Coverage’ post was particularly popular, and generated the most pageviews in a single day that I’ve ever had on a post. Most recently, my post regarding my January Loyal3 trades generated quite a discussion in the comments section, so feel free to check it out.

Interest Income: New this year is interest income from savings accounts my wife and I have. I figured I’d add it to my tracking since it really is passive income and something I’m comfortable disclosing. While you won’t ever see our full net worth or financial picture here, this is yet one more source of passive income for us, and puts us even closer to accomplishing our long-term goal of financial independence.

Moving forward, this will likely be a very steady number, with only larger macro-type events impacting it up or down. Either way, it is the one account that is closest to the pace required to hit our goal this year.

Lending Club/Prosper: My P2P lending (also known as Marketplace Lending) returned back down to earth after a really successful December. My monthly net interest earned continues to stay well above $100 per month, and with some additional capital investments, I should be able to hit my goals this year. I’ve added $1,000 in total to my two taxable accounts at both companies right at the beginning of the year, so this should help drive further growth.

Positivity aside, there are some headwinds on the horizon for investors in P2P Lending. It remains to be seen what will be done with the massive split in institutional and retail note availability. Additionally, as investors are flocking in droves to P2P lending, interest rates being offered to borrowers are declining. Just last week, Lending Club again adjusted rates downward for most loan grades. While I can’t articulate exactly how this will impact my accounts, continuing to earn double-digit returns will become more and more difficult. Of course, I’m still more than satisfied to earn 9-10% in a consistent manner, year over year.

Dividends: This is going to be a watershed year for me on the dividend front. My goal is to receive $2,750 of dividends, which is quite a leap forward from the $1,539 received in 2014. With January being on the lower end of dividend payments for me, I am happy to report that it will never go below $100 in a month again. And on that note, the last month I’ll have received less than $100 in a month was October of 2014.

During January, I earned $133.57 in dividends from ten different companies. Below is a list of all my dividends received by company and whether those dividends were reinvested directly. If you’d like a prettier place to view these dividends received, check out my 2015 Dividend Calendar.

  • Baxter International (BAX): $15.60, reinvested into 0.211 shares
  • Bank of Nova Scotia (BNS): $18.43, reinvested into 0.373 shares
  • Cisco (CSCO): $10.17, reinvested into 0.362 shares
  • Digital Realty Trust (DLR): $26.76, reinvested into 0.376 shares
  • General Electric (GE): $30.08, reinvested into 1.216 shares
  • Kraft Foods (KRFT): $1.98, reinvested into 0.0303 shares
  • Main Street Capital (MAIN): $6.18, reinvested into 0.219 shares
  • Pepsi Co (PEP): $1.49
  • Philip Morris International (PM): $21.15, reinvested into 0.253 shares
  • Walmart (WMT): $1.73

As with previous months, I am directly reinvesting all my dividends until my annual dividend income falls between $2-3,000 per year in a particular account, 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, they will be selectively reinvested as earned or combined with additional contributions monthly. You can read about the dividend reinvestment options with Loyal3 in my Snowball City – Loyal3 Dividends post. I’ve heard ‘rumors’ that once you receive $10 of dividends from one particular holding it will be reinvested. I’ll know for sure during March of this year as I receive in excess of $10 in a single payment from a stock.

When factoring in my dividend reinvestments, dividend increases, and stock purchases, my forward 12-month dividends increased to at $2,094.12. This represents an increase of $31.55 from December’s mark, and an increase of $708.12 from a year ago. Even cooler, my forward-12 month dividends average out to be $174.51 per month. Hitting my 2015 goal of $3,000 would bring that average up to $250 per month. Pretty exciting in my book!

The below chart reflects my dividends received, as well as my forward 12-month dividends since the beginning of 2013, when I started tracking things on the blog. I’ve switched this chart back to being a bar graph, as it more clearly shows the quarterly cycling of dividend income.

Passive Income Made Perfect - January 2015 PIMP Update - Dividends Received and 12-Month Forward Dividends

Passive Income Summary

During January, I received a record total of $301.58 of passive income, well diversified across my three different investment types, traditional interest income, dividends and peer to peer lending net interest. While $300 is a month not earth shattering in and of itself, just think about what $300 could buy you today?  

You can find below my updated passive income chart showing my overall passive income for the last few years, since January 2013. My favorite part about this is the three-month moving average. While it isn’t fast, it is absolutely moving upward over time. I expect it to take a serious leap forward this year as my passive income jumps.

Passive Income Made Perfect - January 2015 PIMP Update - Passive Income Since January 2013

January was a great start to the year, and heck, I can even use the word PIMP on my site. Progress is being made, much like my 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 ClubProsper, and the completely revamped Dividend Growth Portfolio. 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 2015 goals on the 2015 Goals page.

Flickr: Chris Phutully

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  1. As usual you have put up some great numbers in every respect. Dividend income, P2P lending and some great blog stats too. I see we share quite a few similar names for our January dividend income. I still haven’t jumped on board the P2P train as many other bloggers have but it does look interesting. I still may need a little more history before I decide to make that jump into the space. Thanks for sharing.

    • DH, I’ve been involved in P2P lending for a long-time now, and given the relative consistency of returns I’ve seen over the period, I’m comfortable building out my accounts there, so that in 8-10 years they are really passive income producing machines.

      Feel free to let me know if you have any questions as you look into P2P lending.

  2. W2R,

    Congrats on another solid month of passive income. Great results considering how long you’ve been at it.

    I’m not particularly interested in P2P lending for a variety of reasons, but I’m glad it’s working out well for you!

    Can’t wait to see where you’re at by the end of the year with more aggressive investing. :)

    Best regards!

    • I would agree, things are consistently headed in the right direction, and with some solid capital input, this year should be an impressive leap forward over last year. I’m pretty excited for what the near future holds in this regard.

      While each person must invest in what they are interested in, out of sheer curiosity, I’d love to get your thoughts on P2P lending, and what inhibits your interest in that as a source of passive income.

      Thanks for stopping by and commenting DM!

      • W2R,

        P2P lending doesn’t seem all that passive to me, frankly. The tax ramifications are more complicated and unfriendly (especially if you have defaulted loans, which you will certainly run into over time), and now with institutional investors, it becomes more laborious and time consuming to find appropriate notes to fund. I’ve read some forum discussions where people are rushing to their accounts at certain times of the day during feeding times. I don’t work at a conventional job anymore and even I don’t have time for all that. I’ve also noticed the returns coming way down.

        Maybe if this is still around in 10 years and people are finding success, I might get into it. Right now, there’s no long-term history for P2P against stock returns, so it’s hard to compare the two. Typically speaking, fixed income (which this basically is) is inferior to stocks over long periods of time. So I see no reason to take capital away from equity in a high-quality company in favor of P2P lending. Just my take on it, but I wish you (and others) well with it.

        Best regards.

        • DM, thanks for clarifying your reasons and for sharing your thoughts. As I said before, each investment type must be something considered separately and solely by the investor, and no ‘one size fits all’ should be applied. I’ll address a few things in your post, the first being the passive, or in lack thereof, nature of the investment as you suggest.

          In a given month, if I spend more than 5 minutes on my three P2P lending accounts in total, I’ve used too much time. I’m completely automated with my investment and find it to be less time consuming that dividend growth investing by a mile. In fact a mile might not be significant enough. While there was a period of time where I logged in at ‘feeding times’ years ago, the availability of automated investment options has completely eliminated this reality for investors.

          The second item I’ll touch on is the returns/diversification. I know you’re solidly in the camp of 100% equity, and I respect that given your investment in solid dividend paying companies. For me, having multiple sources of income not only takes the benefits of having 50 companies paying you dividends, but expands that to different asset types, further covering my income needs should one type of investment get impacted more than others. Additionally, properly done, P2P lending can be structured in a way to provide an extended, rolling three-year emergency fund should you need additional or capital without having to sell equity investments. I have a post coming out about this tomorrow on 1500 Days.

          Now, we are in complete agreement that the tax ramifications of P2P lending are far more complicated than that of dividends. However, at this point, things have been clarified enough, with plenty of readily available guidance, that this aren’t really all that imposing. The tax forms provided by the companies are fairly comprehensive and self-explanatory, and no real additional work is required besides having a few more numbers to input. The unfriendly nature of defaults only occurs once you’ve had $3,000 of defaults in one year, net of capital gains. Since the size of account required to hit that number is quite large and/or the risk of notes invested in is quite high, it won’t affect most regular retail investors at all.

          Thanks again for sharing your thoughts. Everyone has their own investment strategy, but what is most important is that we’re all striving for the same goal, financial freedom.

  3. Hi W2R — congratulations on a great month! I just love your monthly updates. They’re so visually rich and not just a bunch of words… very inspirational!

    Keep up the good work and take care!

    • As you’ve noticed, it is the visuals that help drive this blog, either in spreadsheets or pictures or charts. Images can very clearly tell a story that words alone cannot, and for that reason I like to add them to my posts.

      Thanks for the support FerdiS!

  4. Great work on getting your dividends higher. It seems like it takes forever to get anywhere, but they do start to add up after a while.

    • NNL, welcome, and thanks for stopping by! While it might seem to take forever now, the beauty is the speed in which the snowball will accelerate over the next few years as compounding sets in and takes over.

  5. I really like how you are presenting the figures graphically. Any reason why you choose to use DRIPs on some of your holdings but not others?

    • Eric, thanks for the compliment! As for DRIPing my investments, they are all set up to DRIP, however, in my Loyal3 account, the automatic reinvestment of dividends is not done, with the exception of KRFT. Going forward, I’ll likely continue the DRIP until my dividends grow a bit larger, at which point I’ll combine with my fresh capital.

      Appreciate you stopping by and commenting!

  6. Congrats on having another solid month in dividend income. The dividend average is moving up nicely. Good job!

  7. Great progress on your passive income for the month. I’m also a big fan of DRIPs. Any reason why you plan on selectively reinvesting once your annual dividend income hits $2-3K?

    • I plan on transitioning to selectively reinvest so I can best control where I put my new cash and future investments. I don’t think there is anything wrong with DRIPs, however, it forces you to potentially load up on equities that are significantly overvalued. Of course, nothing is set in stone, and that is just my current thoughts/plan.

      ACI, thanks for the comments.

  8. Looking pretty solid all around! Keep up the good work! Catching dividends from a lot of solid companies.

    Keep up the good work! Looks like your page view goal might get smashed by the end of the year! =)

    • Each day brings opportunity, and it is up to us to snag that opportunity. I’m looking forward to continuing to build momentum and gain traction this year to propel myself faster down the path of financial independence.

      Here’s to smashing goals ILG!

  9. What a PIMP update, W2R :) Very solid numbers coming in. All of your diverse investments are really paying off handsomely, and I especially like seeing those dividends getting bigger and taking over the rest of the passive income. I look forward to the months ahead. Have a great week!

    • Haha you like that? Anytime I can drop PIMP into the mix seems like a great idea to me! The diversity of my income sources is something I’m happy about, and I’d love to add another one or two sources on top of what I’m currently exposed to today.

      Enjoy your week as well Ryan, and thanks for commenting.

  10. Great passive income there, I love the dividend income especially, hope to have that one day!

  11. You are kicking some tail! 2015 will be great for you. Never having another month below $100 in dividends is a big achievement…I hope to be there some day. Good luck going forward!

    • DD, this year is certainly shaping up to be outstanding indeed. I’ve set myself up for success, so now it is a matter of going out and achieving it.

      Thanks for reading and for the luck!

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