Freedom Fund Update – January 2014

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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.

December was yet another very quiet month for the Fund. I’ve been rather short on capital lately, as I disclosed the purchase of a car that, hopefully, should last me a decade or more with very little cost requirements beyond normal maintenance, insurance and gas. That purchase was quite large, and so I’ve been unable to spend as much on equity transactions as I’m used to. Nonetheless, I still found time and money to add to my burgeoning position in Kinder Morgan Inc. (KMI) mid-month. Other than that, it’s been business as usual as I continue to scan the market for attractive opportunities and let the dividends from the portfolio pile up in beautiful fashion.

I also made a change to the portfolio table on the blog. Many readers have asked me to include my cost basis for all of my positions, and I was happy to oblige. Although I’ve publicly disclosed my cost for every transaction since this blog went live in March 2011, it’s not realistic to go hunting down articles to figure out how much I paid for a certain stock. So I’ve now published my cost basis for every single equity holding I own, and I’ll continue to update this information going forward as I add to holdings or initiate new positions. I hope it’s a change you readers find value in!

The current market value of the Freedom Fund stands at $146.930.61. This is a 2.6% improvement on last month’s published value of $143,198.49. Although it feels good to be closing in on a portfolio value of $150,000, I’d much prefer a natural correction in the stock market which would allow my current capital (which is more limited than usual) to go further by being able to purchase cheaper equities with higher yields. Of course, it’s a fool’s errand to try and predict where the stock market is headed so I’ll just continue to dollar cost average my way into positions, monthly as usual.

And though I would prefer a cheaper market, it is pretty amazing to sit back and reminisce about what happened for my portfolio over the course of the last year. In the January 2013 update for the Freedom Fund, I listed my portfolio value as being $87,985.11. Here we are a year later and it’s now just a few strides away from the mid six-figures. It’s really amazing what seemingly small steps every single day can add up to. It’s been my mantra all along that saving more than half of one’s net income and investing intelligently in companies that continue to hike dividends regularly is a surefire path to success and wealth. If this isn’t the proof in the pudding, I don’t know what is.

I’m currently invested in 43 companies. This is the same as last month, as my only investment was into a company I already owned a piece of.

These updates are mainly designed to show the increase 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 KMI

How are your portfolios doing? End 2013 on a high note? 

Thanks for reading.

Photo Credit: Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net  

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42 Comments

  1. DM,

    Great looking year overall for the FF. 2013 was almost a straight shot up, we don’t get a lot of those. I think we’d all like to see things slow down a bit to open up some value in 2014, but it is quite fun and exciting when things keep going up. Best of luck in 2014 and Happy New Year!
    -RBD

  2. Great year DM! I think I read that 2013 was the best year for stocks since the mid 90s. I’ve enjoyed following your progress and your pursuit of financial independence. Good luck this year!

  3. Dividend Mantra,
    Wishing you an amazing 2014! Happy new year! 2013 was such an amazing year, can’t wait to see what you have in store for your readers in 2014.
    Sincerely,
    Ian

  4. Captain Dividend,

    I think my monthly contributions would probably average out to somewhere around $2,500 per month throughout the year. I’m kind of doubtful I’ll be able to keep that pace throughout 2014, but I’m going to do my best. 🙂

    Cheers!

  5. RBD,

    2013 was indeed crazy for stocks. I’m cautious here, and I wouldn’t be at all surprised by a 10%+ correction in the broader market. We’ll see what we get.

    I wish you the best of luck in 2014 as well!

    Take care.

  6. Joe,

    Thanks for stopping by.

    2013 was a great year for many of us, especially those of us who invested heavily in U.S. stocks. I can’t see that type of success for stocks continuing throughout the coming year, but I still plan to DCA my way in on a regular basis as capital allows.

    Congrats to you on a great year as well.

    Best wishes.

  7. Chris,

    The stock market was red hot this year. Can’t see that repeating again, and so caution should be heeded.

    Thanks for following along. I look forward to following your journey as well!

    Best regards.

  8. D-S,

    Thanks so much. I’m really fortunate to be where I’m at. I’m definitely giving it my all.

    I’m not sure how many companies I’ll be invested in by the end of the year. I still have many companies I’d like to invest in at some point in time, but valuations will determine the timing, not the number of positions in my portfolio.

    Best of luck in 2014!

    Take care.

  9. Ian,

    Thanks for the ongoing support. I really appreciate it!

    I hope to continue to put out great content that has value. I have so many ideas at any given point – it’s just tough to find the time to put all of them down on paper and write the articles. But one day I won’t have that problem. 🙂

    I wish you a wonderful 2014!

    Best wishes.

  10. You had an impressive 2013 with portfolio growth, dividend income growth and media attention. Also soon your will be hitting 2 million page views. The snowball is getting bigger and bigger.

  11. You’re making tremendous progress, especially when one takes into account your income level. Some day everyone will look back and marvel at the awesome progress you’ve made given the circumstances. When people say “that’s impossible” you can back it up with solid evidence.

    I would love a nice market pullback before I pull the trigger in about nine months.

  12. That is really a great portfolio!
    Do you think, that you reach the number of 50 companies in 2014?
    Or is the diversification with 43 companies sufficient for you?

    Best regards!
    D-S

  13. What a great year hasn’t it been Jason. Have you considered SAN Banco Santander? 9.5% yield Latin America too big too fail bank. I have that in my portfolio and considering adding to more.

  14. That’s an impressive increase in the value of your portfolio! Like you though, I’m not too concerned about the total value. In fact, I’d welcome a correction to buy great companies at cheaper prices. Either way, I plan to make consistent purchases as always. The only different might be that I build up just a little bit larger cash position. I do think the energy sector is providing some value right now though.

  15. Hi Charles,

    I’m showing a 7% yield from Yahoo, having paid out .6278 over the year. This was actually lower than the .6401 paid out in 2012. Add in the 19% withholding tax and we’re down to 5.67%. Still a nice yield and I do like the Spanish banks. I own BBVA myself.

  16. 2013 was a banner year for US equity investors. While I liked to see the portfolio number increasing, it kept sucking out the values that were available. The key though is that your dividends continued to increase month after month and I’m sure made a huge jump year over year.

  17. DM, way to go, please keep up the good work. The cost figures are, in my opinion, more interesting to stare at then some of the benchmark indexes, especially over time. Happy 2014!

  18. Investing Pursuits,

    2013 exceeded my expectations by far. And while I’ve cataloged the investment success quite publicly, I’m also extremely grateful for the success this blog has achieved. I can’t believe I’m approaching 2 million pageviews. It’s really amazing! I’m really excited for what the future brings here, and I just hope to be able to continue writing quality content that people find value in.

    I wish you the best for this year as well!

    Best regards.

  19. DividendVet,

    Well, past performance is no guarantee of future results. But I do hope to be able to acheive even half of the success in 2014 that I did in 2013. With that said, I’m definitely not looking backward. I’m always looking to the future and FI, and doing all I can to make my dream a reality.

    Best of luck to you going forward as well.

    Cheers!

  20. Spoonman,

    Thanks! My income level is, while substantial when compared to the global average, certainly not overtly high. I grossed very close to $60k in 2013. I’m grateful for every penny of it, but I would say most Americans wouldn’t believe it’s possible to acheive early retirement on that type of income. And I’m aiming to prove that impression very wrong. 🙂

    I’m looking forward to seeing you guys cross the finish line and start the rest of your life freely! I hope we get the correction you’re after, but I’ll continue doing the best I can with what I’ve got.

    Best wishes.

  21. Charles,

    I looked at this bank a while ago – when the ticker was still unfortunately STD. I can’t remember exactly why I passed it up, but I believe it was a lack of dividend growth history and a seemingly unsustainable payout. I haven’t looked in quite some time, but that’s what my memory is telling me right now.

    I wish you the best with that holding. 🙂

    Take care.

  22. AAI,

    I agree. A nice pullback would be nice, as it would allow our new capital to go further. Capital gains look great on paper, but since I don’t plan on selling anything they offer me little else.

    I admire your consistency. It’s the approach I take as well. It’s impossible to predict the market, although my gut is telling me to remain cautious here – especially with the Shiller P/E remaining at such elevated levels.

    Best regards!

  23. EL,

    Thanks! I hope to continue writing for a long time. My ultimate dream is to write all the way from start to finish, and then continue writing as I show what FI looks like on an everyday basis. 🙂

    I hope 2014 will be a fantastic year for you as well.

    Take care.

  24. Pursuit,

    2013 was crazy, wasn’t it? Although it’s nice to publish big, fancy numbers on these updates I really wish the run in equities was much less and I’d actually have larger ownership stakes in many companies because my money would have bought more shares.

    And you’re right. The dividend income is what ultimately matters. And that came close to doubling YOY.

    Keep up the great work!

    Best wishes.

  25. Life In Center,

    Thanks! I’m very excited to get things started off on the right footing.

    I think I’m averaging somewhere around $400/mo going forward. I’m not sure I could go that low, but I’ll bet I could come close to $1k/mo if I decided to go back to the spending ways I enjoyed just a year or so ago. I’d have to go back to being car-free, without health insurance and my diet would suffer. However, it’s great to know that if I had to I could probably get by with very little part-time work if I really had to. It’s good to push our limits every once in a while and find out what we’re capable of. And I know that I could get by on $1k/mo without being too crazy.

    Best regards!

  26. FerdiS,

    Thanks! My progress keeps me on track for financial independence by 40. I just hope it continues. 🙂

    We’ll see what happens to the market. I guess it takes a certain mindset to openly wish for a market correction, but it’s just that thinking that way comes very naturally to me.

    I hope you have a wonderful start to the year as well!

    Take care.

  27. Katz,

    The cost figures are pretty cool to look at. Not all of my investments are in the positive, even after the huge run stocks had last year. And that just goes to show why it’s important to diversify. Furthermore, it also shows why focusing on capital gains can lead you to make poor decisions. If I focused on gains only I would have sold many positions that still have great fundamentals and are continually raising dividends (like KMI). I can’t control what the market prices my assets at, but dividends allow a buffer between me and the market in the form of cash. And I like cash. 🙂

    Best wishes.

  28. Looking real good, a great way to start 2014 for sure.

    How much are you averaging monthly in dividends? If you’re real frugal(I mean extreme) I bet you could start living on dividends already with that kind of portfolio but then again it’s nice to have a cushion 😛

  29. Great year and an impressive growth in dividends!

    Wishing for a market correction is weird, though I understand the reasoning behind it for investors who are exclusively dividend growth investors. In addition to DivGro, I have other portfolios, too, so I’m quite pleased to see the markets move higher. As you say, dollar-cost averaging your way into holdings is the way to go!

    Take care, and happy new year!

  30. Good going DM! 2013 was a good year for most investors! I’m hoping to see a repeat in 2014 as well! And I do hope KMI picks up (like you I too am invested in KMI)!

  31. DM, nice improvement. increasing the value by almost 4,000 in a months is something, really. I wish my portfolio could grow at this rate.
    Have you thought on applying a strategy of saving cash only when the markets are growing and buying stocks when the markets are falling? Or you just want to keep it simple (which I agree DCA system makes it simple.).

  32. I’m a couple years older than you and I although I have a 401k and 457, I got motivated to do some stuff on the side and get into dividend stocks. Only started with the dividend stocks in the past 12 months but have been doing the 401k for the last 7 years. Just want to say I really enjoy your blog and you’re one of the reasons I decided to invest extra instead of the typical 20% into the 401k. Being able to quit working is true freedom.

  33. moneycone,

    KMI is still anticipating solid dividend growth of 8% over 2014, so I’ll gladly take it. 🙂

    Thanks for stopping by. Wishing you the best for the new year.

    Cheers!

  34. Martin,

    Well, I was actually buying less aggressively over the past few months and allocating more capital to cash, however the recent purchase of my car drained my cash significantly and now I’m back to square one. But, overall, I still like the idea of averaging into the market monthly. However, I do also like the idea of holding just a little cash back and allowing that to build up separately to take advantage of an extra purchase or two when the markets allow opportunities.

    Best wishes.

  35. Anonymous,

    Being able to quit is freedom, indeed! I’m hoping all of us can attain that type of freedom one day. I’m certainly giving it 110%. 🙂

    Glad you found some inspiration here to build up a taxable account to try and fund your independence. I can only wish you the best of luck with it. I also hope you stay in touch and continue to stop by!

    Best regards.

  36. Hey Jason,

    Thanks for your posts. They’re very inspirational. I’m 35 and I also want to get so that by the time I reach my 40s and 50s, I have enough dividend income where I won’t have to work if I don’t want to.

    Any thoughts on adding Kraft (KRFT) to your Freedom Fund? It yields almost 4% and has a ton of brand strength. However, it trades north of 21x core earnings, has only traded for about a year after being spun-off (not much track record), and the dividend exceeded free cash flow for the last 9 months. Would be interesting in hearing your perspective.

    Thanks!

    Dave

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