February 2016 Dividend Income And Expenses


February 2016 was a pretty standard month for us, but we did have a few surprise expenses.  They threw our usual expense numbers out of whack.  In 2016 our stated budget goals are: A monthly income from investments of $4k, and monthly expenses under $4k.  That monthly figure is $48k per year in dividends.  Using our intended ‘3% rule’, that requires a portfolio value of $1.6 million.  We’re pretty close to that, so we should be OK.

 

Expenses for February

Expenses in February were a crazy $7,076.  Wow!  Did Mr. Tako throw-out frugality and go full-on spendy pants?  Maybe!  

This month saw us eating out three times, a family trip to the zoo, Comcast raised the price of our internet connection by $5, and I repaired the baby stroller for $0.55.  It was a spendy month.

Yes, our expenses significantly exceeded our budget of $4k per month.  No worries mate!  It’s all going according to plan…

This was an unusual month because we stomached the cost of airfare to fly our extended family to Hawaii.  This is a temporary expense.  The costs amounted to $3,540 that will be reimbursed to us sometime in March.  

We’ll end up paying our portion for things like lodging, food, and rental cars – in March also.  I estimate our portion of the Hawaii trip to be around $2,000.  We’ll see.  There is family involved, so I’m not 100% certain who will be paying for what expenses, or when we’ll get the actual money.  

Expect me to provide a full run-down here after our Hawaii trip is complete.

If we subtract out the Hawaii expenses, our actual expenses for February were $3536. Almost exactly what we saw in January.  Only $3 dollars less.  It’s almost like we planned that.  A complete accident, I swear!

Note:  I still need to get you guys a better expense report than just this simple summary.  I had intended to setup a tool like Mint or Personal Capital, but I haven’t yet had the time.  Working on it!

 

Dividends for February

While January was a good month for dividends.  February was uneventful.  Only one security paid dividends in February, so our income looks pretty pathetic by comparison to January.

February Dividends

As you can see, dividends only amounted to $453.73 this month.  There were no foreign taxes that needed to be paid either.

Why were dividends so low in February, when they were so high in January?  Simply put, it’s just when our stocks pay dividends.  January was a great month.  February worked out to be a very dry month.  March is going to be another $4k+ month.

That’s just how the dividend-income boat floats.

A visual representation of February. Image Credit: Flickr
 
February Investments

On the very last day of February, we invested approximately $40,000 of our excess cash into a stock.  It was a large bank that we’ve owned for many years.   This new investment increased the total value of that holding by 33%.

Why buy a bank on the last day of February?  

My investment thesis was pretty simple… Values of large U.S. banks have been depressed for the last couple months (due to expected loan defaults in the oil and gas industry).  For most banks, this is mainly a temporary problem.  It would not permanently kill their business.  Wall Street was thinking very short-term when it depressed prices of these banks.

Now, I can’t predict what the price of oil is going to do (only make educated guesses).  But, as oil prices began to rise above the sub-$30 range, there were a couple possible outcomes: 

  • Oil prices rise high enough to minimize risk of large loan defaults.  Result:  I do pretty good on this investment.
  • Oil prices drop back down to sub $30 and defaults happen as expected.  Result:  Sub par performance for a year or two, but in the long term the company will do OK after the air clears.  In the meantime, I still get to collect dividends, and long term ROI should still exceed 7%.

As I watched the price of oil creep up, world leaders began to make noise about limiting output.  I decided that the probability of either scenario happening was about 50%.  I was happy with BOTH outcomes  (see: The Dhandho Investor for more details).  

So, we invested, and it’s looking good. “Super Tuesday” (March 1st) happened, and the value of our new investment rocketed forward 5%. Yeah!  I’ll take that!

 

How did your February go? Did you purchase any stocks in February?

 

[Image Credit: Flickr]

16 thoughts on “February 2016 Dividend Income And Expenses

  • March 3, 2016 at 2:40 AM
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    All in all a good expense month, if you ignore the trip costs.
    Living if dividends seems to be volatile on the income side. How do you manage the csh flow between top months and months like February?

    It looks like banks in the us recover a bit indeed. My option is now again out-of-the-money. It means the stock price went up.

    Great choice if pictures.

    Reply
    • March 3, 2016 at 3:04 AM
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      In general, (due to the income volatility) we try to keep about 6 months to 1 years expenses in cash. This helps even things out.

      Reply
  • March 4, 2016 at 12:58 AM
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    Hey Mr. Tako,

    Wow, going out for dinner 3 times? You big spender you 😉
    You guys must be looking forward to Hawaii. Brave though that you paid upfront for your family. Its a very nice gesture, don’t get me wrong. But money and family generally don’t go well together, unless for some reason every one is aligned in their financial perspectives (there must be a couple in yours as well). Ah, what do I know?!

    Cool to see though that your core expenses are pretty stable!

    Cheers.

    Reply
    • March 4, 2016 at 2:25 AM
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      Our family is pretty reliable when it comes to money. I’ll definitely get it, but I just can’t guess when.

      Reply
      • March 4, 2016 at 12:31 PM
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        Good for you! In that case you will probably have a worry free holiday 🙂

        Reply
  • March 4, 2016 at 5:32 AM
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    Wow, that is a whole lot money you put in to invest.

    Reply
  • March 4, 2016 at 6:39 AM
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    Liking the site…. Made the same/similar bet mid month… BAC!

    Reply
    • March 4, 2016 at 11:20 AM
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      Seems like that one is working out well too 😉

      Reply
  • March 4, 2016 at 10:38 AM
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    Those big ticket items really throw off the numbers. Enjoy Hawaii. I love it there and will try to eventually retire there.
    I picked up a few shares of KMI when it down in February. It was a good purchase and I should have purchased more. We’re a bit low on cash, though.

    Reply
    • March 4, 2016 at 11:23 AM
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      I’m in the same boat. Wish I’d purchased more.

      Reply
  • March 5, 2016 at 3:52 AM
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    Nice update! Looking backwards February wasn’t eventfull, however during the month, I’ve experienced some sharp fluctuations. That again confirms you shoudl just sit back and let time do it’s magic.

    Reply
  • March 5, 2016 at 3:51 PM
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    Love the update, and I’ve thought about funneling some cash into a couple big bank stocks with decent dividend prospects, especially if the Fed increases rates later this year like they’ve planned.

    Reply
  • March 7, 2016 at 4:31 AM
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    Great job on almost $4K in dividends! I am almost to $2K, but I do have a significant rental income which helps. The rental income is north of $150K and soon to be increasing.

    It all takes time, but if you do not save, and LBYM, it will never happen.

    Great blog!

    Reply
  • March 8, 2016 at 4:23 AM
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    Hey Mr Tako, do you have a blog post where you explain how you went from 0 to $2M? Always interested to see if I’m doing things wrong, if I should be more patient, or more generally what’s realistic for a given level of income

    Reply
    • March 8, 2016 at 4:29 PM
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      I haven’t written a post like that yet, but it’s a great idea! I definitely should do it. I wonder if I have enough of the old records to do a proper writeup…

      Reply

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