WOW! 2020 is almost over! It has been a very tough and challenging year.
It’s just amazing how time’s been running super fast, and my monthly passive income update is more than due.
Let’s get very briefly into the numbers, shall we?
Compared to November 2019, there has been a hefty passive income slump of roughly 50 %. Ouch! 🙂
Dividend income in November was more or less in the same range as in the previous year (2019: CHF 379 vs. CHF 346). Two dividend cancellations – one of the world largest beer producer AB Inv and the other one of UK bank giant HSBC – have almost been offset by new Passive Income Contributors Tate & Lyle, British Petroleum, Apple and Prosus. Banco Santander has resumed shareholder distributions after having stopped them for several quarters, but dividends are still significantly lower than in the previous year.
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 COVID-19 pandemic brought huge health, social and economic challenges to the whole world and has a deep impact on our daily lives.
The pandemic also made businesses, educational institutions (schools, universities etc.) and other organizations all around the world more than ever depending on communication systems like Windows Teams, ZOOM or Slack. The pandemic also changed our buying behaviour, bringing consumers to e-commerce platforms provided by Amazon or Shopify. These developments have accelerated the shift to the cloud with services like Amazon Web Services (AWS), Google Cloud or Microsoft Azure which all led to a hue spike in internet traffic. This consequently has put content delivery network and edge computing companies like Cloudflare and Fastly in the forefront of a paradigm shift.
But we want to ensure to be well positioned by having a nice combination of Growth Stocks and Dividend Paying Holdings (whereas the ideal of course is the combination of both aspects in the same stocks such as the ones of Microsoft, Apple or Prosus).
All right, let’s have a look at our latest stock buys we made in the last two months in the total amount of USD 1’802 (this is inclusive commissions/fees):
Pinterest (10 shares for USD 45.54 resp. a total of roughly USD 450)
Fastly (5 shares for USD 86 resp. a total of roughly USD 430)
Etsy (4 shares for USD 123 resp. a total of roughly USD 492)
Draftkings (10 shares for USD 43 resp. a total of roughly USD 430)
Some background information on these four businesses.
Pinterest is creatively building a unique business platform
Pinterest is an image sharing and social media service designed to enable saving and discovery of ideas and information. If you want to find some inspiring images and creative ideas, Pinterest is definitively the place to go.
Pinterest also belongs to the largest and best known social media platforms among Facebook, Twitter, Instagram, Snapchat, Linked-In etc.
But with Pinterest, it’s much much mor than a social platform. It’s about connecting and sharingIDEAS. It’s aboutcreativity and inspiration.
I cannot think of another platform that works the same way and therefore, I cannot think of any real competitor for Pinterest.
When users find something they like on Pinterest, they can pin those images to specific boards. The platforms’ algorithms then suggest more new pins based on the user’s interest and previous activities. And here lies the huge business potential because some of those suggestions can be advertising.
Pinterest as a company is relatively young, founded in 2010, the growth story has just begun. It’s operating in a huge and thriving market such as online advertising, and what we can be see is that Pinterest is increasingly venturing into e-commerce.
Fastly – a super fast growing content delivery, compute and security edge platform
Fastly is smaller than Cloudflare, operating an innovative content delivery, compute and security edge platform.The company was founded in 2011 and has very strong partners and clients. That list includes names like Google, Shopify, Etsy, Pinterest, Slack, Microsoft, Vimeo, The ew York Times, Reddit, Stripe … and TikToc.
In fact, TikToc the Chinese video-sharing social network service (which is owned by ByteDance) is Fastly’s largest single customer, accounting for 12 % of revenues. Amid a looming ban from U.S. app stores, Fastly’s stock price got hammered in October.
When a businesses of the quality and potential of Fastly get’s 30 to 40 % “cheaper” due to rather temporary setbacks and uncertainties, well that catches my attention. I am more than happy to having initiated a small position and will buy more over time.
Fastly provides an edge cloud platform which is designed to help developers extend their core cloud infrastructure to the edge of the network and consequently closer to users. Fastly’s technology is essential for customers around the world, its edge cloud platform includes their content delivery network, image optimization, video and streaming, cloud security, and load balancing services. Fastly’s cloud security services include denial-of service attac protection protection, bot mitigation, and a web application firewall.
Etsy – a wonderful niche e-commerce website
Etsy is an American e-commerce websitefocusing on handmade and vintage items as well as craft supplies. You can find a wide category range, it includes bags, clothing, jewelry, furniture, toys, art items and alsow craft tools and supplies.
All vintage items must be at least 20 years old. The site follows in the tradition of open craft fairse, giving sellers personal storefronts where they list their goods for a fee per item.
What’s very obvious when going through the financial statements of the cmpany is that Etsy has found ways to effectively monetising its market place and that it has a very capital light business model. It’s operating in a niche, growing very fast, giving the company economies of scale and margin expansion.
When people sell on Etsy, there are various fees like listing fees, transaction fees, payment processing fees (if Etsy Payment is used) etc..
Draftkings, the largest fantasy sports and mobile sports betting operator
DraftKings is an American daily fantasy sports contest and sports betting operator.
It’s quite an interesting concept and business model. DraftKings allows users to enter daily and weekly fantasy sports-related contests. The users can win money based on individual player performances in sports (baseball, football, hockey, basketball, golf, tennis, martial arts, auto racing etc.).
So how does fantasy sports work?
In fantasy sports, users can create their own teams which are real players of a professional sport like tennis, football or basketball. Players may be from existing leagues (NFL, NBA, NHL, MBA etc.) or even college teams.
And how does DraftKings make money?
The company makes money off player entrance fees. For example, DraftKings may collect a fee resp. a percentage from users who pay for league buy-ins. The main amount from each user is placed into the pool, which is paid out to the winner at the end. DraftKings also makes money by selling ads on their sites and partnering with other big names like NBC, Sports Illustrated, Comcast, and Sporting News.
DraftKings is the clear leader in an interesting, growing niche and the platform is a beneficiary from economies of scale and network effects.
Several U.S. states consider fantasy sports (including daily fantasy sports) a game of skill and not gambling. There are some risks as well as opportunities from changes of regulations resp. legislative requirements.
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.
Wow! Time’s really flying by, and my passive income review with cash flows from dividend paying stocks and received interests from Peer to Peer and Crowlending Platforms is more than due.
Let’s quickly get into the numbers.
Note: all numbers are in Swiss francs (CHF). CHF 1 corresponds to around USD 1.10.
5.5 % higher dividend income but more than 70 % lower cash flows from Peer to Peer lending
While October 2019 showed total Passive Income of Swiss francs 880 (USD 968), we now see a lower total amount of roughly CHF 580 (resp. USD 640).
This was solely due to withdrawals from Peer to Peer platforms I made over the past months. Last year, we had almost USD 60’000 invested on different P2P/CL platforms. I’ve reduced these investments by almost two third. The cash withdrawals have been used to build a very nice Tech Portfolio by investing around USD 40’000. I’ll post a separate article about my four latest stock acquisitions in the Tech sector. So stay tuned.
Dividend income was slightly higher this month compared to October in the previous year (CHF 377 in October 2019 versus CHF 389).
It’s difficult to compare the different Dividend Income Updates of this year with the numbers in 2019 amid the challenges caused by the COVID-19 pandemic. I’ve seen several dividend cancellations, some cuts as well as some deferred payouts.
But it’s also interesting to see huges differences how the businesses are affected. For instance, while British tonic maker Fevertree navigates smoothly through the crisis and managed to increase its shareholder payout, Scottish soft drink producer Ag Barr sees huge challenges to remain profitable amid closures of bars etc. One would think that Fevertree would have been hit harder than Ag Barr whose drinks can be found in many Scottish households whereas Fevertree’s tonic is mostly consumed in bars which have been hugely impacted by lockdowns.
Marlboro maker Altria hiked its dividend a bit (+2.4 %) as did Coca Cola (+2.5 %).
Spirit and beer maker Diageo maintained its payout despite shutdowns of pubs and restaurants around the world have been hammering its business.
British pharma company GlaxoSmithKline maintained its payout stable compared to the previous year as did Porsche Automobil Holding SE and Britishcar insurer Admiral Group (the company pays out a higher ordinary dividend but also lowered the special dividend compared to the previous year).
South32 is a spin-off of mining giant BHP Group and has reduced its shareholder distribution. I am fine with that, it’s a tiny position and when the world economy will recover frome the pandemic, mining companies such as GLENCORE, Rio Tinto, BHP etc. will benefit as well as cyclicals and many consumer staples that have been hit from closures of restaurants and pubs.
How was your October 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.
Shifting our financial priorities amid the Global Pandemic
It’s just amazing, how time passes fast. We are already going through the last quarter of the year which amid the COVID-19 pandemic is extremely challenging, dynamic and unusual.
The pandemic changed a lot in our societies, our economies and has huge implications for people and businesses around the world.
My wife and I remain committed our Journey towards our Big Goal of Achievieving Financial Independence by the End of 2024 by establishing and growing passive income streams which are true compounding machines and will cover 100 % of all the spendings of our family of four in a matter of just a few years.
In the short run though (with regard to the next couple of months), we have taken a much more careful investment approach than usual (compared to the years before) with a very strong focus on preserving cash, continuously working on a very robust savings rateand keeping as much as possible from our day job incomes as possible.
But the pandemic has changed a lot. For instance, it’s complicated – to some extent merely impossible – to travel and meet people and visit buildings abroad. Our investment case also changed completely amid huge business pressure, demand disruptions and uncertainties.
So, as the pandemic just “froze” or even smashed millions of projects around the world, so it did with some of our plans.
We are okay and very fortunate. We keep patient and will preserve our financial flexibility.
An overall strong September with USD 1’200 in cash income from investments
Let’s dive into some numbers.
The total amount of CHF 1’205 (USD 1’325) was received in September. As you can see above, the main contributor have been dividend paying stocks with also nice inflows from Peer to Peer and Clowdlending investments.
Note: all numbers are in Swiss francs (CHF). One Swiss francs (CHF 1) corresponds to around CHF 1.10. The numbers are net after taxes (e.g. dividends are AFTER the deduction of witholding taxes etc.)!
Compared to September 2019, our total passive Income has been roughly 20 % lower (CHF 1’459 in September 2019 vs. CHF 1’205 September 2020).
While dividend income from our stock holdings (despite a few dividend cuts) was pretty the same amount as in the same month of the previous year (CHF 1’085 in September 2019 vs. CHF 1’001 in September 2020), interest income from our P2P and Crowdlending Investments was 50 % lower than in the previous year.
This was due to cash withdrawals from ourP2P and CL platforms.
As I’ve shared in previous blog posts, we withdrew significant amounts from our P2P/CL platforms to become more diversified and use the funds to take stakes in growth companies by investing quite heavily into our “Mini Tech Portfolio” we started to build in April this year. We have so far invested more than USD 30’000 into fifteen Tech companies such as Amazon, Alphabet, Facebook, Shopify,Microsoft, Netflix etc..
Early in September, we bought shares of Apple for the amount of roughly CHF 2’000 (USD 2’200) and also took a stake in fitness equipment maker Peloton for around CHF 400 (USD 440).
Second comes our P2P/CL portfolio where around CHF 20’000 are put into following six platforms: Mintos, Bondora, TWINO and Iuvo, which all four focus on consumer loans and EvoEstate as well as Crowdestate which both letting you investing into loans in connection with real estate projects.
Then comes our new Tech Portfolio. Our holding in growth stocks don’t pay dividends with a few exceptions like Microsoft and Apple. These fiften companies in our Tech Portfolio have each the potential to be true sector disruptors with massive growth potential. As long term oriented investors, we want to have stakes in these companies that are having a huge influence on our way of life.
What about you, fellow reader, how was your September in terms of Passive Income? Did you buy some interesting new stocks or other income producing assets?
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, glad you are stopping by for another monthly financial update, sharing our progress with regards to our savings rate, wealth accumulation and passive income generation as well as our latest moves and decisions we made on our Journey towards Financial Independence.
Note: all numbers an in Swiss francs (CHF). CHF 1 corresponds to around USD 1.10.
Wealth climbed by CHF 15’000 in August, driven by stock market performance in August and strong savings from our day jobs
Our dividend income (numbers always net after taxes) was lower compared to the same month in the previous year (USD 363 versus USD 422) as following three of our August passive income contributors have scrapped their shareholder payouts for the year: beer producer Heineken, Spanish Banco Santander and UK defense company Babcock International. On the positive side, UK soft drink maker Nichols informed that they will reinstate their dividend and pay it out later in September (by the way the same with UK insurance giant Aviva, which is one of our largest dividend contributors). So there are definitively bright spots.
Income from Peer to Peer (P2P) and Crowdlending platforms was a bit lower than in the previous month (CHF 186 versus CHF 210) due to cash withdrawals we made in July in the total amount of CHF 2’000. Currently we have roughly CHF 22’000 invested on six platforms: Bondora, Mintos, Iuvo, Twino, EvoEstate and Crowdestate.
We used cash withdrawals from P2P and Crowdlending platforms (in the amount of CHF 2’000) to further strengthen our Tech Portfolio, adding shares of US tech-base payment services company Square and streaming company Netflix.
We are still targeting CHF 20’000 in Passive Income for the year, which is very ambitious given the challenges several businesses in our stock portfolio face and can be seen in several dividend cuts and even some complete elimination of payouts for the year. Last year, we hit CHF 14’000 and we are very confident that Passive Income for 2020 will be significantly higher than that.
In June, I started my Passive Income Challenge with the goal to work adding new passive income sources to diversify our cash flow streams. So far, I’ve been able to add Cashback Credit Card (in June). All I have to do, is using my credit card to pay things I would have to pay anyway and receive 1 % or 2 % in cashback. Most of the time I pay in cash or via bank transfer but using credit card more regularily can make sense. I am still very careful and want to keep full control on our spending habits.
What about you, fellow reader, how was your August in terms of Passive Income? Did you buy some interesting new stocks or other income producing assets?
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.
