Passive Income Review 2016 and Outlook

Just eleven days, and 2016 will be over. Time goes by so fast! It has been just an amazing year, I had a great time with my family and so much fun on our journey towards Financial Independence.

I want to share with you a brief look back to my passive income from dividends and interests which I have been tracking since 2012. I will also make some projections regarding future passive income streams.

As you can see, my two passive income sources developed quite differently.

Dividends are passive income driver

While the growth of my dividend income averaged 15 % year over year (YoY), interest income decreased significantly since 2014 due to

  • falling interest rates on savings accounts (currently at 0.1 %)
  • lack of attractive fixed income investment alternatives (dramatically falling yields over the last years)
  • stocks comparing favourably with fixed income investments
  • reallocation of funds from bonds (after maturity date) into shares

For 2016, my total passive income stands at around CHF 4’100 (Swiss Francs, trades about at parity to the USD), over 90 % of that amount derives from dividends. Growth of my dividend income comfortably compensated the sharp decline regarding interest income.

Around half of the 15 % dividend growth comes from new investments and the rest derives from dividend increases (organic growth) and dividend reinvestments (e.g. in Royal Dutch Shell, Diageo, Rio Tinto, HSBC etc.).

There were some setbacks regarding organic growth (Rio Tinto and BHP Billiton slashed their dividend payments) but also some very substantial dividend hikes in 2016.

In 2016, I invested the amount of CHF 16’600 into new positions. I will cover these stock investments in my next blogpost.

Unproductive money gives us flexibility

As we are looking for our dreamhouse, a relatively large chunk is “parked” on savings accounts which is to the substantial detriment of our profitability as that money is not working for us, but it gives us a lot of options and bargaining power (e.g. in regard to mortgage etc.).

I am always keen on establishing more and more attractive passive income sources and will be very oportunistic in this regard. I will take care to be in a position to benefit from market retreats and “buy the dips”.

Passive income goals for 2017

I expect my future annual dividend income growth to reach at least 15 %. That rate doubles my dividend income every fifth year. The compound effect will support my wealth building process very nicely.

Interest income is very likely to increase for the first time for several years. I will take care to seize some attractive investment oportunities.

I also plan to develop at least one additional passive income source.

For 2017 I target total passive income in the amount of at least CHF 5’000.

 

How was your 2016 in terms of passive income? Which passive income sources do you have and which goals did you set for the year to come?

 

 

 

 

 

2 thoughts on “Passive Income Review 2016 and Outlook”

    1. Thanks Investment Hunting! I am really very happy with the results for 2016 and will give my best to keep on track. I will definitively set my focus on dividends which are my passive income driver.
      Appreciate you stopping by. All the best in 2017!

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