It was another challenging month for markets and I expected the portfolio to start with an eleven, just like it has for March and April but in the last few days of May I came good and did some buys to push the value into twelves, woohoo! ($12,688)
It’s hard work trying to increase this little snowball by $1,000+ per month but I know the rewards are worth the effort. I’ve seen how compounding and continually adding to a portfolio can completely change your life as I’ve done this with my individual stocks portfolio. I nearly quit a thousand times as I would see the value of my portfolio go sideways or go down for months at a time while I was living frugally and adding as much I could every week!
Some months I would see my portfolio go down more than I was earning in a whole month while I lived on absolute peanuts! Every spare dollar I had went to quality dividend paying stocks and I am so thankful that I did it as those dollars are still working for me now and producing enough dividends to pay my bills and allow me to live a life of freedom. Admittedly it’s a very frugal freedom but that’s why I’m still looking to increase my passive income and it’s also why I started this ETF portfolio last year.
ETF Dividend Payments in May
May was a low month for dividend payments as I only had the monthly paying JPEQ (JP Morgan’s covered call option ETF JEPQ in the US) paying out. It paid out $13.90 in May and has been slowly increasing each month. I’m getting closer to my $25+ per month goal for this ETF.
June will be another low month as it’ll just be the monthly payers, but I’m expecting July to break through the $100 barrier for the first time as I’ll also have my quarterly paying ETFs distributing dividends. The previous dividends high was $78.37 in April.
The ETF Dividend Portfolio for May
Last month the portfolio was sitting at about $11,243 and I seriously did not want the portfolio to start with an eleven for the third month in a row. The plan is to increase my ETFs by about one thousand dollars each month but when the market is treading water or going down it really doesn’t help my cause.
So I invested a total of $1,372 into the portfolio and BAM! We’re at $12,688!!! That’s an increase of about $1,445 which means that without the new funds added the portfolio improved by a not so impressive $73. Still, better than a loss though.
I was expecting to add very little to the ETF fund in May as I was intending to use any spare cash I had for other investments but those plans didn’t pan out, so I had extra for ETFs.
I have been looking to increase my overall dividend yield and to add more monthly paying stocks so I have added two new ETFs this month. Both of them pay monthly and have yields of more than ten percent! They’re both US listed and they’re both covered call option ETFs.
The first is QQQI which is the NEOS Nasdaq-100 High Income ETF. It doesn’t have much of a history as it only started trading about 6 months ago but I’m expecting it to perform similar to the NEOS sister ETF (SPYI) which uses the same options strategy with the S&P500 index.
And the second is the REX FANG & Innovation Equity Premium Income ETF trading as FEPI. Similar to QQQI but more concentrated as it uses the Solactive FANG Innovation Index. It’s current top 5 holdings include Tesla, NVIDIA, Broadcom, Advanced Micro Devices and Micron Technology.
The argument against investing in covered call option ETFs is that they don’t capture all of the upside of the index that they track and the total return is less than investing in the actual index.
Both points are true and I intend to buy an ETF that tracks the Nasdaq 100 and I will continue to add to IVV which tracks the S&P 500 index but I also want this ETF portfolio to be dividend focused.
My individual stocks portfolio has been more growth focused so I want this ETF portfolio to be my cash printing machine. I don’t want to have to sell stocks to raise money, I want dividends and lots of them. So a one percent yielding growth stock isn’t going to fill my pockets with coins like a ten percent yielding stock will.
If I was twenty years old and wasn’t in a hurry to retire on my dividends then I wouldn’t be looking into monthly paying covered call option ETFs paying out more than 10% each year as they do have some leakage compared to simply buying and holding the actual index. I’m using my dividends to pay my bills now though and I would like them to increase.
Here’s what the portfolio looks like this month after the two new ETFs were added…
See the ETF Dividend Portfolio from April.
What to Expect in May
I know that I hold very small amounts of each ETF and should be just adding to each position but I’m probably going to buy another new ETF in June. The plan has been to own between 8 and 12 ETFs and then just add to them forever.
Once I have settled on those forever holdings I can stop looking for shiny new things and simply add to my held positions. The portfolio will become much more passive as I won’t be spending hours each week researching the different types of ETFs out there. I’ll just watch the dividends come in and decide how much to reinvest and how much goes into my pocket.
How is your ETF portfolio going this year? How close are you to reaching financial freedom?
Total ETF + Managed Funds Portfolio for May
Portfolio value inside the Vanguard website: $4,503 up from $4,456
Betashares ETF portfolio: $4,358 up from $3,895
US & ASX listed ETFs held in brokerage accounts: $3,826 up from $2,872
Total Index Funds portfolio value (VHY, VGS, GEAR, JPEQ, FEPI, QQQI and IVV): $12,688 up from $11,243
Most recent dividend payment (May): $13.90 down from $78.37 in April (Monthly dividends from JPEQ)
Dividends paid in 2024 so far: $173.04
All dividends paid in 2023: $102.68
All ETF dividend payments since buying $323.68
ETF Dividends Goal: $2,000+ per year.
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