Tallying My 2005 Passive Income

So where am I at with my passive income? After all this is just as important as measuring my net worth, if I can't generate enough income to pay for my living expenses, that I won't be financially free no matter what my net worth is.

2005 was a great year for me to increase my annual passive income. I continued to make some strong long term investments in pharmaceuticals with high dividend yields (mainly Pfizer and Merck), I converted my primary residence into a cash flow positive rental property, and I also took advantage of several 0% APR credit cards to generate free loans that earned interest in higher yield online savings account like EmigrantDirect. I also benefited from dividend hikes with several of my stock investments.

Dividend Income
Here is a list of the stock investment I have with dividend income in 2004 and 2005:

Annual Dividends

Investment

2004

2005

IBM

$ 156.40

$ 251.37

ExxonMobil

$ 49.81

$ 54.68

Pfizer

$ 132.44

$ 300.02

Bellsouth

$ 154.19

$ 166.38

Edison Int.

$ 8.82

$ 11.88

Medtronic

$ 19.02

$ 22.80

Pepco Energy

$ 17.97

$ 18.85

Duke Energy

$ 77.08

$ 88.66

Merck

$ 52.22

$ 108.56

General Electric

$ 65.57

$ 73.91

Lowes

$ 1.89

$ 2.70

Proctor & Gamble

$ 27.39

$ 31.09

Chevron

$ 18.34

$ 21.62

Anheuser Busch

NA

$ 54.00

Total

$ 781.14

$ 1,206.52


Note: This is dividend income from individual securities I own in taxable accounts. This does not include assets in 401k, Roth IRA, or securities in mutual funds.

My dividend payments in these taxable accounts are up over 54% from last year. I expect these to continue to increase each year as I make new investments in these and other companies.

Interest Income

2004

2005

Interest

$39.76

$783.99


The amount of interest I earned in 2005 increased dramatically as a result of several 0% Balance Transfers offers and increasing interest rates. I currently have most of my savings in EmigrantDirect which is paying 4.0%APY.

Rental Property Income
Since I converted my primary residence to a rental property in 2005, all of my costs involved in improving, cleaning, and renting the property negate any positive cash flow for the year. However if the tenants renew their lease in 2006 then I have the potential to make up to ~$2,000 in cash profit from the rental property activities(depending on the maintenance expenses occurred) for 2006.


Overall not a bad year. I received $1990.51 in interest in dividends for 2005. I expect 2006 to be an even bigger year with additional income being kicked in from my rental property and additional investments.

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Comments (12)


DATE: 11:57 AM
Looking good - actively tracking passive income is something I've never done in the past, but will make it a point to do so in the future. Thanks for the inspiration!

DATE: 8:29 AM
I have fun tracking passive income as an hourly income. I add up all passive income, divide by 365 days and then divide by 24 hours. Thus giving me an hourly income no matter what I'm doing. Sleeping, golfing, driving, whatever.Currently, I've got $7.53 an hour coming in. You've got 22.7 cents per hour, but then, I've got 30 years on you.Good luck on achieving your goal.Tom

DATE: 9:25 AM
Tom,That is a great way to look at it! Hopefully I will be closer to your hourly income sooner rather than later ;-).

DATE: 4:30 PM
anonymous -If you don't mind sharing; where's your $7.53/hr. coming from?Thanks,Alex

DATE: 4:31 PM
Sorry, missed the name at the bottom of the post. My question is for Tom.

DATE: 4:56 PM
Alex, don't mind at all.The biggest part comes from dividends and interest on a probably 30 different equity, bond,and CD investments=$41,662.$15,300 comes from 1 duplex that I own outright.I also took an early retirement and draw $9500 a year from a pension, even though I am working 20 hours a week at another company.I'm about three years away from drawing social security, which I will also consider passive income.Tom

DATE: 8:43 AM
Looks like your individual stocks are weighted towards US large caps. At your age I'd think a good diversification, including a strong component of small caps and international (perhaps through a low cost index from Vanguard or E-Trade) could juice your returns over the long haul.

DATE: 3:59 PM
Good point! I tend to put more of my 401k assets in small-cap and international mutual funds which is why they aren't on this list. Most of my savings in taxable accounts as you can see are in US large caps. To be honest your right- I am weighted more on US large-cap than I should be at my age, I think its more a mental block than anything ;-).

DATE: 12:38 PM
Hey there, I'm a new visitor to your blog and found your post very informative. I too am a young investor and have a propensity to choose dividend paying stocks. Have you considered diversifying into some real estate investment trusts (REITs)?

DATE: 2:01 PM
Scott, Have stayed away from REITs because I feel my rental house (and future house I am currently looking for) will give me enough real estate exposure for now.

Your posts are very interesting. What strategy do you have for a recent college graduate working full-time? My 401k contributions are at 8%. I have a HSBC savings account with 5.05% interest rate. I have also consolidated my student loans and deferred them as I am pursuing graduate school part time. In addition, I am taking advantage of 0% APR credit loan and deposited the money into my savings account. I am a long way from retirement so I don't think its feasible to start putting money into IRAs, long term CDs, etc.. I am single and do not have a family yet. My approach is to accumulate as much capital as early as possible, taking as much risk necessary. Do you think this is feasiable approach to take, given that I have no immediate financial goals except to get rich as fast as possible?

IMO - You should start investing ASAP. As you can seefrom above, I think the path to financial freedom through becoming a good investor.

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
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