Sell: ARLP

In the aftermath of the election the market went all sorts of crazy. I sold my ARLP position when it jumped up several points. It was on my sell list for a while, given their Div Cuts, and uncertain future. The stock has been recovering, and while it may continue to climb for some time to come, this was a good point for me to sell. I used the proceeds and existing cash to invest in a position in O.

This makes a huge dent in my dividend income, as ARLP paid well. I'm selling mainly because I have additional overhead to complete forms for ARLP's special tax structure. This wipes out most of my income. Second, they qualified for a sale after cutting their dividend. I want stocks that can grow their div over time, even if slowly.  ARLP served me well -- while I took a loss on the stock, they paid me around $920 in dividends over the years. I knew they were a high paying div stock and I knew the risks involved. Again, this income helped me get my dividend machine going, and allowed me to get into other positions.

I waited until after their last div payout of the year, and got lucky with a coal industry bump after the election. I'm happy to get this off the books in 2016.

Portfolio Report November 2016

In November I finally sold ARLP and used the proceeds and dividend earnings toward buying O. This checks a long-standing goal of getting out of ARLP. O is my first monthly dividend payer, so my month-to-month and month-year-ago comparisons will be off for the coming 12 months.
My LendingClub experiment is going well. Every loan paid on time in November, and proceeds were automatically re-invested.

HCP Spins Off QCP, cuts dividend

HCP spun off QCP on October 31. As a result, and as expected, HCP cut their dividend by 35%. This will have a real impact on my portfolio, as HCP is my largest position. Of course, with QCP being a brand new company, little is known about how they will handle dividends. For now I'm going to assume no dividend, and see when some data comes out. I'll hold on to the stock at least until they report a quarter on their own and provide some guidance on dividends.

Same thing for HCP. They will need to prove to me how they perform and handle dividends over the next quarter or two. There are other REITs like NHI or O that may be more attractive if HCP or QCP cannot deliver.

Portfolio Report October 2016

Several changes in October. HCP cut dividend after it spun off QCP. More on that later. Also, I put $2500 in a LendingClub account to experiment with a new mostly passive income stream. No other transactions for me.

Dividend Earned in October: $176.66

Dividend Expected in November: 668.41. Lower than August due to HCP cut, but still above November 2015.

Dividend Earned Trailing twelve months: 5,526.11

Dividend Expected Forward twelve months: 5,314.90.  A drop due to HCP cut, but excluding anything that QCP may produce.

LendingClub accrued interest: $24.40

LendingClub expected total payments November: $75.42

LendingClub Update November 2016

Last month I put $2,500 into LendingClub.  I select automated investing with a mix that's just below 'safe, lower returns', going for 'still safe, better returns'.  I opted to split my money into 100 x $25 notes. These were picked up relatively quickly, and loans were issued usually within a week.  There's one note hanging, stuck in Review. I'm not sure what's going on there. According to LendingClub documentation the loan can sit in that status up to 30 days before it's either issued, or canceled. If canceled, my $25 will be released and automatically put towards another loan that matches my investment mix target.

LendingClub Experiment

This year has been great for stocks, including dividend stocks. I have not put any fresh capital into my stock portfolio, and only re-invested proceeds just once. I've been on the sidelines most of the time, waiting for two conditions: sufficient dividend proceeds to build up cash for another investment round, and good entry points for quality dividend stocks. I'm right at a point where the first condition is satisfied and will be more actively looking for good stocks.

I've been wanting to diversify from dividend stocks, and stocks in general, but never found a good options. I don't want to be a landlord, it's too much hassle, too illiquid, and too much of a gamble unless you do it large scale. So when I recently read about LendingClub, I figured I'd give it a try. LendingClub is a peer-to-peer lending company. There are others like Prosper, but LendingClub came best out of the reviews I read.  They did have some fraud issues earlier this year, but that seems to be behind them now. I'm not going to review LendingClub here, but I'll share some experiences.

High level the system allows people to get a loan, with each loan chopped into small notes that are backed by investors. For example a note can be $25, so a $10k loan is backed by 400 notes. As investor you invest in notes from different loans to reduce your risk. There are different loan grades based on the applicant's credit rating and other factors. The return is based on the interest rate and reduced by any loans that are written off if they default.

It's only been a week, so no real numbers yet. I opened an account, transferred $2500 into it, and had to wait a few days for it to clear. I signed up for Automatic Investments, where you select a risk/return profile and the system will invest for you. I figured this is good for a start to get a feel for the system.  On Monday my money was in the account and gradually used to fund different loans. You'll have to wait until a loan is fully funded (e.g. investors have picked up all the notes to back the loan), and then the loan gets issued. Within a week 90% of my notes were in issued loans, and I expect my first payments early November.  The remaining 10% are being issues, meaning their loans are fully funded, and I expect them to be issued early next week.

I'm curious about a few things. First I want to see how long I can keep a 'perfect record', meaning no defaults, charge offs or even late payments. I have some high risk loans in the mix, and I expect it won't be long. Second, I'm curious to see how quickly I get back enough money to buy another note.  Now that my initial investment is put to work, I'm debating if I should re-invest the returns in a different way -- more risky or less risky.

The next item I want to learn about it the secondary note market. I'm sure people have figured out the right time to sell a note to optimize their profits. Notes that are way past due could be charged off, or possible sold for a dime on the dollar to recoup at least some of the initial investment. I'll have to read up on it and see what I want to do. The easy thing is to just let things ride, but I want to see how much time it takes to manage it for more optimal returns. After all, I'm actively building a passive income portfolio.

Dividend Report September 2016

September saw the first payment of TRTN, which I'm happy about. The stock is still not doing well, but as long as they keep paying the dividend, I'll hold on.

• Income: $ 482.65
• Trailing 12 months: $ 5,516.83
• Forward 12 months: $ 5,662.10

In October I expect $ 176.66 in income.