Word of the year for 2016: Unbalanced. While I was able to make sizeable gains in terms of cash on the sidelines, I made a limited number of acquisitions. Likewise, while I spent the majority of my productive waking hours at work, I contributed less to this website in terms of writing and didn’t complete my 2016 Reading List.
Having noted the above, I have to say that 2016 was, on the whole, a resounding success.
Table of Contents
Passive Income: Dividends and Interest
While it is easy to take for granted, I would like to begin by recognizing that none of the companies I own cut their dividends through 2016 – all were either maintained or raised. This is the strength of investing in high quality companies. The last thing I would ever want is for one of my companies to cut their payout. This steady stream of cash flow represents the lifeblood of my financial health.
Looking back, in 2015 I was able to earn $1,986.65 from dividends alone (excluding interest) on a currency-neutral basis. In 2016, that sum grew to a full $2,519.46 in dividend income. Last year my dividend total grew 26.0%, while this year I actually slightly increased my growth rate to 26.8%! I am able to source a good portion of this growth rate back to late 2015 and early 2016 when I made a number of stock purchases which were able to show mostly full accretion to my income this year.
Dividends are, however, only one part to this income equation. I also try to earn as much as possible on cash sitting on the sidelines. Earlier this year I called my bank to increase the rate of interest from 0.8% to 2.0%. I did so again just a few days ago and this boost should help my 2017 totals as well. At the time of writing, my December interest has not hit my account yet, so I will assume $14.00 which should be roughly accurate. Factoring this in, I earned $182.15 in interest this year which is lower than last year. I do expect, however, my 2017 interest income to be the most I’ve ever achieved given a higher rate of savings and a closer attention to negotiating interest rates. Added the interest together with my dividend total above, my overall passive income this year has hit a record-high of $2,701.61!
Avid readers of the site will recognize the significance of this total. As part of my Five Year Plan which I laid out in August of 2015, my passive income goal for this year was $2,500. As a result, I am 8.1% ahead of pace at this stage of the game. This leaves me feeling again cautiously optimistic heading into the New Year given the fact that I have not been investing as aggressively as I was around this time a year ago. A pullback in the market would be welcomed as I would be able to get invested at better valuations.
Taking my total passive income and dividing by 12 will reveal that my monthly passive income at this stage rounds out to $225.13. This means that before I actually get out of bed in the morning to begin a new month, I’m already $225 ahead of the game. Part of the treat of the Dividend Growth Investing (DGI) strategy is getting to take these passive totals and put them back to work to earn even more.
GRB Blog
While over the past two years or so we have maintained a pace of four articles or so per month, this year we saw a significant decline in output around the halfway mark. Not to make any excuses for this lapse, I have to say that this year proved to be by far the busiest I have seen in terms of work.
I am currently employed in the healthcare field and was directly involved in the recent implementation of an Electronic Health Record (EHR) at my organization. The effort to get this done saw me decline in productivity elsewhere; my writing took a real hit. However, now that the EHR is up and running, I anticipate having more availability to continue pursuing GRB’s mandate to increase financial awareness and improve the lives of readers.
The EHR I helped implement was developed by the Cerner Corporation (CERN). I was able to get a first-hand glimpse at how the business model works in this industry which provides clinicians with access to data at their fingertips and largely eliminates the need for a cumbersome paper chart. CERN and other companies in the industry, though, tend not to pay dividends as they are typically technology based growth companies. As a result, they would fit only on the fringe within the overall GRB scheme for investing to build lasting wealth.
In the News
The news story of 2016, for me, was the U.S. Presidential Election. It consumed a huge amount of the airwaves as it seemed every day there was another swing to the rollercoaster to follow. Even as a Canadian, this story took precedence over all else.
Donald Trump is a disruptor. Love him or hate him, I believe he has the potential to do great things given his knowledge of the business arena and willingness to do things differently. While I believe he must soften his tone and recognize the import of the office appointed to him, he has an opportunity to be a great President. I simply hope he makes the most of it.
As I have said before, though, I believe we attribute far too much in terms of the stock market and business cycles to the office of the President. The bottom line is that people do not spend more or less at the grocery store based on the political atmosphere. They don’t put clothing on the backs of their children based on there being a Republican or a Democrat in office. Bush didn’t cause the “Great Recession” and Obama isn’t responsible for the recovery. There are a multitude of factors at play in a complex, global economy, all of which contribute to the overall picture.
As an investor, I believe the prudent thing to do is to continue quietly acquiring high quality growth companies with a solid track record of increasing dividends and let the noise take care of itself. Reinvest and look to the future.
Conclusion
This past year has been a good one. I’m grateful to be in the position that I am in. I see good things coming in 2017 and hope to continue sharing them with all of you on this website. My writing output should increase considerably as I will now be returning to a more normalized work schedule.
Thank you and all the best to you and your families in 2017.
– Ryan
***Edit (January 4, 2017): I hadn’t realized that Hydro One Ltd (H) was going to pay me a dividend on December 30, 2016. That brings my sums up to $2,531.01 for dividends and $2,713.16 total passive.
How did your 2016 measure up? What is your vision for 2017?
Full Disclosure: No position in CERN and no intention to initiate one in the next 72 hours.
Pictures courtesy of pixabay.com
Sounds like an absolute ripper of a year! 26% you cant be upset with that! Now imagine if you could produce that increase year on year for the next 10 to 20 years (unrealistic, I know) you would be able to retire in no time. Keep up the good work.
BHL,
Thanks for stopping in. I was actually surprised to see that I bumped it up by 26% for another year in a row. I hadn’t been active through the greater part of the year, but with the organic dividend growth in my portfolio coupled with a few early purchases, I was able to see my totals mushroom. As you said, if I can keep that pace for a few more years running I’ll be in great shape.
Take care!
– Ryan