Royalty Cash Flows By Quarter

Consistent cash flow is nice! I like to be able to predict how much I'm making in my investments the best I can, especially with early retirement on the horizon (countdown to 2026 is underway). With that in mind I was curious as to how consistent my music royalty investment cash flows have been over time. It has felt as if there were fairly consistent, but I wanted to see what the data showed me.


Quick reminder that royalties are (generally) paid out quarterly. Sometimes there are split royalties that may come in a couple of times during the quarter, especially if there are international royalties to be paid for US investors. But largely you should expect quarterly payments for your royalty investments.




For this analysis I needed to find royalty investments that I've made that I've owned for all of 2021, and did not sell since that causes a one time spike in cash flows. I have 3 catalogs that fit that criteria.


I then took the total cash flows from all 3 of these catalogs by quarter and added them together, giving me a total cash flow for them broken down by quarter.


Finally I determined of the total cash flow from these catalogs for 2021, what percentage of it was received in each quarter for the year. Worth nothing that royalties paid in a quarter were generally earned in the previous quarter as there's an industry lag for collecting royalties and processing payments.


So with all that said, here's the breakdown:



I was shocked by how consistent this cash flow has been! As you can see Quarter 1 was the lowest coming in just short of 20%, and Quarter 4 was the highest coming in at a little over 28%. That's a pretty tight range with not much variability. I honestly expected there to be a bigger spike in one of the quarters than this. That being said I absolutely appreciate the consistency of these cash flows!





The next step will be to compare year over year, but for that I need to let me current portfolio of royalties age a bit more. Once all of my 1st quarter payments are received I will compare how Q1, 2022 did compared to Q1, 2021 to see how consistent that is.


Always more to come, so stay tuned! Please subscribe to my blog to be sure an never miss and update.


 

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