Our path as Dividend Growth Investors has paid off handsomely so far. It’s amazing, how slowly, but surely, our Dividend Income has been marching up over the years (all numbers are in Swiss Francs CHF), which correspondes to around USD 1.1; all numbers are always net after taxes).
But then, in 2020, during the COVID-19 Pandemic cash generation from our investments has been hit quite substantially. Even wonderful businesses like Disney, French luxury giant LVMH or British soft drink makers Britvic, Nichols and Ag Barr completely scrapped their shareholder payouts. Many others businesses in our stock portfolio drastically reduced their shareholder payouts which led to a 13 % lower dividend income compared to 2019.
Interestingly, one year later, our Dividend Portfolio is recovering quite nicely.
Compared to April 2020, our Dividend Income jumped by 33 % from CHF 1’800 to almost CHF 2’400. This increase was mainly due to organic growth and the fact that several companies resumed their dividend payouts such as British bank HSBC, LVMH.
Our second Passive Income Machine consisting of Peer to Peer and Crowdlending Investments generated significantly lower interest income compared to the previous year (currently CHF 49 versus CHF CHF 413). This was due to substantial cash withdrawals we have been during 2020 to build up our Tech Portfolio.
So, we are quite happy with our total April Passive Income in the amount of CHF 2’400 which brings the number to CHF 4’520 resp. to CHF 1’130 on average per month.
For the full year, we want to achieve at least CHF 15’000 in Passive Income which currently looks quite achievable.
What about you, fellow reader, how was your April in terms of passive income?
Disclaimer You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
This increase was due to a combination of organic dividend growth, the contribution of new stock positions (Microsoft, BB Biotech which both were added in 2020) and witholding tax reinbursements on our German stocks (2019 dividends).
For the whole year, we target at least USD 15’000 in Passive Income (net after taxes) which looks quite achievable. Over the first three months, more than USD 2’000 have been generated, resp. more than USD 650 per month on average.
The second quarter traditionally is the strongest one, with many of our European stock holdings paying out their annual dividends.
In the last three months, my wife and I held our savings rate well above 70 % which gave a nice boost to our wealth accumulation process.
In addition Stock Performance had a positive effect: for instance holdings in Facebook and Alphabet in particular have been marching up quite nicely. Currently, the market value of our total Stock postions stands at around USD 440’000 (see our Dividend Stock Investments and our Tech Portfolio).
Disclaimer You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
With my February Passive Income being more than overdue, I will quickly run through the numbers and share with you also our latest Stock Buys and Sale of Share Positions.
It’s good to see, to be on track again, with a robust February Passive Income result.
We work towards total Passive Income for 2021 to be at least USD 15’000 which is roughly 50 % higher than in 2020, and 7 % on top of what our total investments generated in 2019.
Aggresive investment shift has paid of nicely
Since April 2020, my wife and I have invested heavily into Tech Companies, financed to some degree by cash withdrawals from our Peer to Peer and Crowdlending investments and underpinned by our increasing savings rate (we cut spendings amid the pandemic and shaped our cost structure).
Over the last weeks, I sold out stocks with a total market value of almost USD 15’000 and reinvested a portion of the sale proceeds (roughly USD 5’000) into new stock holdings and two new Crypto Positions.
And still, due to a Strong Performance of our Dividend Stock Portfolio and our Tech Holdings, the total Market Value of our Share Holdings easily jumped over USD 400’000 (compared to roughly USD 300’000 one year ago).
Over the last weeks, I had acquired stocks of following companies (for a total of roughly USD 5’000):
Mc Donalds
L’Oreal
Pernot Ricard
Total
Paypal
Adobe
Zoom
Nvidia
Nio
Sea Limited
Furthermore, I invested around USD 1’000 in Bitcoin and Ethereum.
Over the last twelve months, tech investments had shown a performance of almost 45 %, driven by positions like Facebook, Square, Tesla (see post Tesla is more than just cars), Amazon and Shopify etc.
Cyclical stocks recovered very well, in particular oil and commodity shares (Rio Tinto, BHP Billinton, Royal Dutch Shell etc.) and chemicals such as BASF and Covestro.
Amid the very strong performance of many stock positions in our Tech and Dividend portfolios, we decided to put some money off the table and exit following holdings:
British American Tobacco
Imperial Brands
Altria
Massimo Zanetti
3M
JM Smucker
Furthermore, we sold off all our shares in tech company Slack, which will be acquired by Salesforce. This move was profit-taking from our side and I am sure, that I will be able to enter into a position of Salesforce at more attractive conditions lateron.
I wrestled some time with selling 3M, which is a dividend king and a very well positioned company. On the other hand, we are already well positioned in several of its industries through Henkel, Reckit Benkiser, BASF, ABB, Victrex etc.
I exited all tobacco positions (Altria etc.) as these holdings definitively don’t fit with our investment strategy anymore.
Massimo Zanetti and JM Smuckers are classic “consumer defensive, coffee stocks”. We are already very heavily positioned in various consumer staples names such as Nestlé, Unilver, Heineken etc.and I preferred taking a stake in Mc Donalds, we also had taken a stake in the world largest chocolate producer Berry Callebaut back in 2020 as well as in Danone and drink companies like Fevertree, Campari etc..
Disclaimer You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Hey there, fellow reader. My January Passive Income Update is more than due, sorry for that, but the start into the new year has been quite busy so far.
Let’s get very briefly into the numbers: Total Income from various Passive Income Sources was roughly Swiss francs (CHF) 480, the equivalent of around USD 530. That’s slightly lower compared to the same month in the previous year (CHF 500 in January 2020).
The main reason for that drop are cash withdrawals from Peer to Peer and Crowdlending Platforms to build up a Tech Stock Portfolio in 2020 with positions like Apple, Amazon, Shopify, Tesla, Fiverr etc.). That strategic shift showed to be highly successful, most of these holdings had a fantastic run so far.
All in all, we have almost USD 400’0000 invested in various Stock Holdings (dividend payings shares and stakes in Tech Companies), significantly higher than the total of USD 300’000 invested last year.
Our cash pile continues to grow, underpinned by a very solid savings rate of almost 70 %. Furthermore I sold out all Tobacco Holdigs (Altria, British American Tobacco and Imperial Brands) to reinvest the freed cash into stocks that show significantly more growth potential. I will share with you the latest stock buys in my February Update, so stay tuned.
Dividend cancellations continue to be to the detriment of Passive Income Generation. The Walt Disney Company for instance has been hit severely by the COVID Pandemic, but there are also exciting opportunities for the business, their streaming services (Disney+ etc.) are a huge success and the stock price really shoot up like a roket in a matter of just few months. Disney truly is a PANDEMIC WINNER Plus a Reopening-Play
So, to sum up: January was a solid month with very strong stock performance and stable Passive Income Generation.
Disclaimer You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
The start of a NEW YEAR is always a great opportunity to look back and make new plans.
Our family of four is well on the way towards Financial Independence by 2024, but 2020 put us back in terms of building reliable and ever growing Passive Income Streams which are supposed to sustain our living costs in future.
A Big Earning Miss
The COVID-19 pandemic clearly had a strong impact on cash revenues from our investments.
While in 2019, our Dividend Paying Stock Portfolio plus our Peer to Peer and Crowdlending investments (P2P/CL) through plaforms like Mintos, Bondora, TWINO etc. generated over USD 14’000 in passive income, 2020 showed a different picture: in fact, Total Passive Income has been significantly lower with under USD 10’000. Initially, my wife and I had targeted USD 20’000 in passive income for 2020.
So, which factors led to that Huge Earning Miss of over 50 %?
Amid the COVID-19 pandemic and the economic effects of lockdowns worldwide, several company elimintaed their dividend payments in order to preserve cash (e.g. in the case of The Walt Disney Company, HSBC, GLENCORE etc.). Other businesses reduced their shareholder distributions signifcantly (e.g. in the case of UK soft drink producers Nichols, BRITVIC, AG Barr). So, dividend eliminations and cuts led to a 13 % lower total Net Dividend Income compared to the previous year DESPITE the fact that in March and April 2020 we had added several strong dividend payers such as Swiss Life, Fevertree etc.
The largest adverse impact came tho from our P2P and Crowlending investments. These generated roughly USD 3’500 in interest income through 2020, but on the other hand, an equal amount had to be written down due to the collapse of the two platforms Kuetzal and Envestio early in 2020, as well as due the failure of Grupeer. So, in 2020, all in all a zero sum game in terms of Passive Income Generation.
Another factor was the adaption of our investment strategy. We made significant cash withdrawals (more than USD 40’000 in the last few months alone) from our P2P/CL platforms and invested these funds into Tech Companies such us Amazon, Apple, Facebook, Fiverr, Etsy etc. In terms of wealth building, this has shown to be a good move, looking at very nice book gains of almost 30 % in total, but on the other hand withdrawals weakened interest generating capabilites of our P2P/CL platforms (by beginning of 2020, more than USD 60’000 were invested, by the end of that year, this has been reduced to less than USD 20’000).
Financial priority shift amid the pandemic
We made several changes in 2020, a year full of uncertainties.
So, a lot of things going on in terms of our financials and there were definitively a couple of bright spots:
Our Savings Rate trough 2020 was very robust. In fact, we went through the year on a Savings Rate of 66 % on average. That’s a very nice chunk of cash we have been able to extract from our salaries and income streams in form of savings.
Despite the fact, that our dividend stock portfolio generated 13 % less in 2020 compared to 2019, the book value of these investments recoverd from a huge fall in March 2020. It had fallen from USD 310’000 to USD 220’000 in a couple of just a few weeks and steadily climbed back to around USD 275’000 by the end of 2020. Still a book loss of over 10 %, but in combination with nice book gains of over 30 % on our Tech Portfolio, the overall result is quite acceptable. In particual considering the fact, that still, almost USD 10’000 in Passive Income had been generated on top of that book value performance.
So, all in all, we came through the pandemic financially stronger and more flexible, with almost USD 400’000 in investments (dividend stocks, tech holdings, Peer to Peer lending etc.), which represents around 40 % of our total wealth.
Roughly 60 % of our total wealth is kept in cash (in Swiss francs) to remain flexible to seize interesting investment opportunities anytime they arise. A big chunk will be used to acquire real estates abroad, once we can travel again.
Several changes in terms of dividend payment dates make it hard to compare with December 2019, e.g. the traditionally strong dividend payer Imperial Brands transferred its shareholder payments in January instead of December.
P2P/ CLinvestments generated USD 116 which is a quite decent monthly income from the roughly USD 20’000 but still, if you compare with USD 727 in December 2019, significantly lower. But again, the P2P and Crowdlending Porfolio is now much smaller (20’000 versus almost 70’000 by end 2019).
Looking ahead to 2021
So, all in all 2020 hit our Passive Income Generators quite hard. But the world economy will recover from the COVID-10 pandemic, and so will our Dividend Stock Portfolio.
We withdrew tens of thousands from P2P and Crowdlending platforms, so clearly this Passive Income Machine will generate reduced revenues, and our Tech Portfolio consists of businesses which don’t pay any dividends (with the exemption of Microsoft, Apple and Prosus).
But we will continue adding Dividend Paying Stocks here and there and several traditionally strong Contributors will resume their shareholder distributions this year.
So, we plan for Total Passive Income for 2021 to be at least USD 15’000 in total, which is roughly 50 % higher than in 2020, and roughly 7 % on top of what our total investments generated in 2019.
What about you, fellow Reader, how was your 2020 in terms of passive income? Which goals did you set for the New Year?
Thanks for reading my post and for sharing your thoughts.
Disclaimer You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
