June dividend income and over-valued markets

In June, our dividend portfolio provided $606.03 in passive income, surpassing our previous 1-month record of $387.16 in December, 2015.  It’s also a big improvement from last June’s $159.24 in dividends, though it’s not quite apples-to-apples since two ETFs that paid us dividends in June (VTI and VXUS) paid their dividends in July of last year.  In July, 2015, we received about $140 from those two, so even adding that dividend income to last June’s number, we are still up over 140% year-over-year.  Our goal is to generate $90k in passive income per year, so we are a long ways off from that goal, but it still feels nice to make progress toward our goal.  I should note that the majority of our dividend-producing securities are stock ETFs, which pay quarterly dividends, corresponding to the stocks they hold, so that was part of the reason June was such a strong month for us, and a $600 month in June does not equate to a $7,200 annual run rate (unfortunately).  This is different from certain bond and preferred stock ETFs, which may pay monthly dividends.

With the news of the Brexit and all of the uncertainty surrounding Europe, I’m reluctant to invest a lot of cash into the stock market these days.  For now, I’m keeping most of our left-over income in cash or fixed income products.  At some point, I’m hoping for more of a pull-back in the market, to put the cash to work, much like the rest of the other readers of personal finance and early retirement blogs, I’d imagine.

At this point, even outside of the uncertainty surrounding the Brexit, the current S&P 500 P/E ratio at above 24 is significantly above both the mean (15.60) and the median (14.63).  This link shows the P/E ratios, as well as other relevant information:


In Robert Shiller’s book, Irrational Exuberance, he has a chart that shows 10-year stock market returns for various PE ratios in the S&P 500.  I read the book years ago, so I don’t remember what the expected return would be when the P/E ratio is at current levels, but I know it is not a good expected return.

At this point, I’ll plan to continue to mostly sit on the sidelines with our extra income.  We are still investing some money in the stock market on a regular basis since both my wife and I contribute to our 401(k) accounts, but we’re just not putting most of our excess cash into the stock market, like we were doing at this time last year.

How about you?  Any readers have strong views one way or the other regarding stocks or dividends these days?