Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it’s aptly named. My portfolio is my way to freedom; freedom from a job I don’t desire to purchase goods I don’t need to impress neighbors I don’t care about. This journey is all about freedom and flexibility. One day the dividend income this portfolio generates will fully replace my day job’s income and my time will be completely my own. What could you possibly want to own more than your time?
I feel extremely fortunate and thankful that I’m able to post these updates every single month which shows the power of monthly contributions to investments because of the high savings rate I maintain. It shows how a relatively large sum of money can be built through the power of time, patience and perseverance.
It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.
February proved to be an extremely fruitful month for the Fund. It was a much more exciting month than usual for me, as I actually prefer boring months when my portfolio elicits about as much excitement as watching grass grow. However, I suppose there is nothing wrong with enjoying a flurry of activity every once in a while as long as that activity is actually helping my portfolio achieve long-term goals.
Some of this aforementioned activity was due to actions on my part. I added to my position in Target Corporation (TGT) early in the month as it was setting 52-week lows. I felt this purchase made a lot of sense for me, as I was adding to a high quality retailer that’s been around for more than a century. Of course, while Mr. Market didn’t agree with me right away, TGT has since popped significantly. This exercise is a good example of why you always want to ignore the noise and separate company fundamentals from stock performance.
Then, as the month drew to a close I added to my position in The Coca-Cola Company (KO) as it too was setting 52-week lows. When the stock market gives me an opportunity like this I try to take advantage as capital allows. This was no exception, and I was simply fortunate to have a little excess capital available when the opportunity presented itself.
There were then activities in the portfolio I didn’t initiate. I’ll discuss these below.
ONEOK, Inc. (OKE) completed a spin-off of its natural gas distribution business, ONE Gas Inc. (OGS), as it is now focusing its operations as a sole general partner with limited partner interests in ONEOK Partners, L.P. (OKS). The terms were that every shareholder in OKE would receive one share of OGS for every four shares in OKE they owned. I owned 35 shares of OKE at the time of the transaction (and still do), and as such I received 8 shares of OGS. I also received cash in lieu for the .75 shares I was entitled to as no fractional shares of OGS were issued. This change is included in my portfolio. I don’t know what my long-term plans are for OGS yet, but it may not make sense to sell as the commission fees would be a large part of the overall position due to the small size.
Vodafone Group Plc (VOD) also completed the sale of its 45% ownership stake in Verizon Wireless during the month of February. Three things happened here. I received shares in Verizon Communications Inc. (VZ), my shares in VOD consolidated to reflect the loss of value in the Verizon Wireless business, and I’ll also receive a cash payment as part of Vodafone’s Return Of Value. For more information on this, I published an article shortly after the news of this transaction went public last September. My total ownership stake in VOD stood at 150 shares before this transaction, and VOD did a reverse 6/11 split on the VOD shares as a share consolidation to reflect the sale. This means my 150 shares became 81 shares, with cash in lieu for the .81 shares I was entitled to as there were no fractional shares given under the consolidation. Furthermore, I received 39 shares of VZ. Finally, I’ll receive a cash payment as part of the Return Of Value, scheduled to hit my brokerage account on March 10, 2014. These changes are reflected in my portfolio; however, I believe my cost basis on VOD is a bit off here. I’ll correct this in the future as necessary.
With all of these changes, I have big news to announce. With the small amount of cash in my portfolio due to recently received dividends that have not yet been reinvested, my portfolio balance just eclipsed $150,000 for the very first time just yesterday. I started this journey in March 2010 with $5,000 and a dream. I now have 30 times that amount! I couldn’t be more excited or more proud. Thank you to everyone in this community who has supported me along the way, as I’ve learned as much from all of you as you have from me. As a community of investors and like-minded individuals we’re stronger as a group than we could ever be individually. This achievement is just proof that living below your means and actively investing your savings intelligently can provide huge results over a relatively short period of time. I don’t make much money, but I do have focus and drive. I believe in consistently saving and investing every single month, no matter what. And this is what results. Below, you can view a screenshot from my brokerage account.
The current market value of the Freedom Fund stands at $149,982.21. This is an increase of 4.1% over last month’s published value of $144,078.80. This is a big move, but the S&P 500 has gained even more. I continue to see weakness in some of my big stakes, including Philip Morris International (PM) and Kinder Morgan Inc. (KMI). However, I see these as opportunities rather than concerns. And, as always, I don’t compare my results directly to the S&P 500 as I believe this is a rather arbitrary comparison that doesn’t really reflect my personal goals that are focused on increasing income in early retirement.
Looking forward, I’m hoping to make at least one investment during the month of March. I’m hoping for two, but it depends on how much capital I have as I’ve been bogged down recently by a large tax bill as well as dental expenses. As always, I’ll look for an attractive opportunity that makes sense on a valuation basis while also considering portfolio weight.
I’m currently invested in 45 companies. This is an increase since last month, as I received the aforementioned spin-off shares in OGS and VZ.
These updates are mainly designed to show the increase or decrease in the value of the underlying equities I’m invested in, but the main purpose of investing in dividend growth stocks is for the rising stream of dividends over time. So with that said I don’t put too much emphasis on these monthly updates on the value of my portfolio. I think it is a good idea, however, to keep track of the rising (or falling) value of one’s securities and be aware of where they are in terms of the marketplace and whether or not certain stocks are attractively priced. It proves to be a useful exercise, for me at least, to update the values monthly. It gives me fresh perspective on which equities are performing well and which aren’t, and from there I can make educated decisions (based on further due diligence) on which stocks I’d like to add fresh capital to (while considering portfolio weight as well).
Full Disclosure: Long TGT, KO, OKE, OGS, VOD, VZ, PM, KMI
How about you? Did you have a particularly fruitful February?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net