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 cover my expenses and my time will be completely my own. What could you possibly want to own more than your time?
I’m extremely fortunate 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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.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 was a particularly strong month, as the S&P 500 climbed 5.49% over the course of the last month. Since a rising tide lifts all boats, my portfolio also performed quite strongly. This is unfortunate, however, in that it limits the number of possible opportunities for fresh capital. I guess I shouldn’t be too upset that I lacked much fresh capital over the past month!
That said, I wasn’t completely inactive. I added to my stake in National Oilwell Varco, Inc. (NOV) one last time at what I felt was a strong long-term value. Though the stock price may go anywhere over the short term, it’s a high-quality company that should do well over a long period of time. In the meanwhile, the attractive yield, large buyback plan, diverse operations, and fairly significant backlog offers a lot to like right now.
Other than that, I was content to let the dividends pile up which will provide a little more ammo for my BB gun over the course of March.
I did make a few adjustments to the portfolio information. I had to change the cost basis and listing for Medtronic PLC (MDT) after it completed the acquisition of Covidien PLC (COV). In addition, I changed the cost basis for Realty Income Corp. (O) and Omega Healthcare Investors Inc. (OHI) to reflect any return of capital over the course of 2014. So the information provided should be 100% accurate as of today.
The current market value of the Freedom Fund stands at $190,209.32, which is a 4.7% increase since last month’s published value of $181,728.90. The portfolio responded well, but was held back in terms of overall performance by its large exposure to energy. Whereas last month I was surprised to see the portfolio hold up well, this month it performed as I thought it would and should.
It’s wonderful to see that chart move up and to the right, but it comes at the cost of how effectively I can put new capital to work. Nonetheless, I still see opportunities in the market here and there and I’m likely to purchase something on my shopping list sometime during March. How active I might be will really depend on how much cash comes my way. I have a tax bill to take care of, but I’m also anticipating selling our car.
Looking forward, I’m still extremely excited about where things are going here. I’m nearing $200,000, which is really crazy and unbelievable. It appears as though the second $100k will come about faster than the first, meaning the old saying about the first $100k being the hardest rings true. Compounding really is wonderful.
The Fund now has positions in 51 companies. This is unchanged since last month. My sole transaction in February involved an existing investment.
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. Thus, I don’t put too much emphasis on these monthly updates. 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 find it a helpful exercise 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 NOV, MDT, O, and OHI.
How did February treat you? Did the market’s relentless march upward lift your boat as well? Do you still see a lot of opportunities?
Thanks for reading.
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