Passive Income – September 2013 Update

Passive Income - September 2013 - Fall Colors

Whew, it’s time to get back on the horse and finish catching up on 2013 and move forward into 2014 after enjoying a relaxing, blog-free holiday season. As most of you are aware, I am finishing catching up from my summer break when I wasn’t actively posting. 

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. In order to help measure my progress, I measure the income each month against the goals I’ve set for 2013. Now let’s see how September stacked up!

Passive Income:
2013 Goal
Percentage of
Annual Goal
Lending Club

Lending Club: September saw my net interest earned increase from the past couple of months to $153.18, hitting the second highest amount since June.  Consistently increasing my account by over $120+ per month is allowing my investments to continue to snowball, increasing the income over time. I would expect each reinvested $100 to bring me an additional $10-12 per year of net interest income. With a few more years of compounding like this, it will be great to see the monthly amounts grow.

As the end of September, my weighted average interest rates were 17.94% and 15.14% in my Roth IRA and taxable accounts, respectively, giving me the potential for high returns over the course of the next few years. I would expect that those two averages begin to move towards one another as the loans I’ve been able to select are averaging in the mid-17% range. For the month of September, my overall internal rate of return was 16.00% across both accounts.

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 September Lending Club update.

Prosper Marketplace: September continued the awesome and consistent performance I’ve seen so far in my Prosper account, the newest of my peer to peer lending accounts. During September this new account earned $17.89 of net interest income, the exact same as August. At the end of the month, my average interest rate of the notes invested in is 21.77%. As you can see above, I am really making great progress on my 2013 goal of $120 in net interest from Prosper considering I started this investment at the very end of May. The additional notes I’ve invested in September from the August $300 deposit should start to increase the monthly net interest the last couple months of the year. If you haven’t yet, check out my full September Prosper update.

Dividends: During September, I received dividend payments from seven of my holdings, Aflac (AFL), American Realty Capital Partners (ARCP), Digital Realty Trust (DLR), Intel Corporation (INTC), Lorillard (LO), Prospect Capital (PSEC), and TAL International Group (TAL).  My dividends, which were the highest they’ve ever been, totaled $133.62 for the month and are detailed below:

  • AFL: $10.57, reinvested into 0.18 shares
  • ARCP: $7.13, reinvested into 0.551 shares
  • DLR: $23.40, reinvested into 0.432 shares
  • INTC: $29.51
  • LO: $21.72, reinvested into 0.491 shares
  • PSEC: $18.17, reinvested into 1.566 shares
  • TAL: $23.12, reinvested into 0.484 shares

As with previous months, I plan on 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. As you can see above, I did not reinvest my INTC dividends. This was due to my exit from the position in August.

While September was not as active as August, I did make a couple of trades, all involving Kinder Morgan (KMI). For those who actively follow KMI, they might remember that at the beginning of August, some strong negatively surrounding KMI came out as the result of analysis and questioning by an analyst at Hedgeye. This report caused some significant volatility with the price of KMI and I took this opportunity to do some short-term trading of KMI leveraging the margin capabilities in my account.

Ultimately, I bought and sold KMI twice, realizing $179.53 in short-term gains, net of interest and trading expenses. Considering I only needed to add $885 to my account to bring it positive, I effectively achieved a buy-in price of $29.27 per share. However, as the gains will be reported as taxable income, my actual cost basis will be reflected as $35.25. As I ended up with an additional 30 shares of KMI, these trades increased my forward twelve-month dividends by $45.60 per year (at the time), and gave me a yield on cost of 4.54%.

When factoring in the dividend reinvestments mentioned above, the multiple KMI transactions and any dividend increases, my forward twelve-month dividends increased to $1,239.48 from $1,187.30. This represents an increase of $52.18 and carried me over the $100 per month average in twelve-month forward dividends.

Passive Income Summary:

September was a phenomenal month. I made strong progress towards achieving my updated 2013 passive income goals. Given the largest month of dividends yet and solid returns with my peer to peer investments, I was able to knock out approximately 11.7% of those goals in one month! As you can see below, my passive income continued to rise after July’s dip. Going forward, it can absolutely be expected that there will be dips on a monthly basis as dividends are not received in a smooth fashion. Because of those dips due to timing, I added a trailing three-month average in August. This will smooth out and better reflect the growing stream of passive income I am generating with my investments.

Passive Income by Month - September 2013

And with that, we’ve reached capped off another passive income update. Without a ton of time or energy my investments earned $304.69 of total passive income for me during the month of September! Additionally, as I mentioned above I just started tracking the three-month moving average, and in September, it increased from $249.79 to $260.62, a gain of$10.83 .

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 Dividend Growth. 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: U.S. Forest Service, Southwestern Region, Kaibab National Forest

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  1. WYOR,
    Great progress and a nice summary of all your September passive income. I bet you are looking forward to catching up on all these posts. Keep ‘em coming!

    • I cannot wait to plow through these remaining three months. The last quarter of the year provided a couple of surprises, so it will be nice to get those documented.

      Thanks for stopping by!

  2. Nice job homey.

  3. That’s a nice looking graph. Everything is moving up and to the right and each segment is increasing too. I’ve never used margin to buy any stocks, just not for me. But I should have taken advantage of the opportunity to sell some puts on KMI in August or even early December. At least I got to add to my position at a good price then. Great month and looking like you’ll hit your target for the year.

    • Thanks JC! I love the graph (Excel nerd alert!) and the growing passive income it represents. I love keeping personal statistics, so it will be great plot the three-month average over the course of the next couple of years.

      Appreciate you swinging by and commenting!

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