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 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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.
August was just another spectacularly boring month where the dividends kept pouring in and the Fund continued to benefit from ownership stakes in 49 wonderful businesses across a variety of sectors and geographies. I’ve purposely built the portfolio into a powerhouse where no one business, geography, or sector has an overwhelming effect on its ability to generate regular and reliable dividend income that rises well above the rate of inflation.
McDonald’s Corporation (MCD) is struggling because of food supplier issues, menu complications, expanding health awareness, and changing eating habits? That’s okay because Kinder Morgan Inc. (KMI) is consolidating operations and planning to increase their dividend by a 10% annual rate from 2015-2010. Where and when one business may falter a bit, there are five other businesses in line to pick up the slack. Thus, the snowball keeps rolling!
I had very little activity over the previous month. My sole transaction was to add to my burgeoning position in Deere & Company (DE), which is a company that I believe looks pretty solidly positioned for the long haul.
My overall capital availability for new stock purchases has decreased somewhat since quitting my role in the auto industry to pursue writing on a full-time basis, but I continue to allocate as much capital as I can to the portfolio so as to stay on pace for my ultimate goal of financial independence by 40 years old. I think if I can stick to the plan whereby I still save substantial portions of my income and use those savings to invest every single month I’ll be in a position that looks an awfully lot like financial independence by the time I’m four decades old.
The current market value of the Fund stands at $171,328.09, which is a 4.06% increase over last month’s published value of $164,642.84. This is the first time my portfolio has ever ended a month with a value over $170,000. Cheers to another milestone!
That’s a solid performance over the last month, and these types of increases on a percentage basis become increasingly harder to attain both as my portfolio value has increased and available capital for stock purchases has decreased. Furthermore, my portfolio is basically like a small raft floating in the market’s ocean – market fluctuations have a significant effect on the Fund’s value, much more so than any purchasing activity I can initiate.
The portfolio’s performance this past month was helped by the aforementioned move KMI announced, which caused KMI’s stock price to advance quite appreciably. In addition, major stakes in companies like PepsiCo, Inc. (PEP) and The Coca-Cola Company (KO) have done well over the course of August.
I’m currently invested in 49 companies. This is unchanged since last month.
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 MCD, KMI, DE, PEP, and KO.
How was your August? A great month for your portfolio?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net