Freedom Fund Update – October 2014

piggybank1Well, 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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.

September came and went in a flash! I can’t believe it’s already behind us. My personal life has been kind of hectic, with a move back to Florida to be with my significant other once more. But what’s fantastic is that even with all this unusual drama in my personal life, the Fund just keeps on plodding along as if nothing happened at all. I could live in Florida or Timbuktu and the Fund would just continue humming. It needs no captain for day to day rowing, which is wonderful to know when I need to be temporarily alleviated of that duty. Just one more joy of being an investor focused on extremely long-term investments in high-quality businesses.

However, I didn’t let the ship steer itself the entire time. No, sir! I’ve gotta earn my keep, and as the Chief Investment Officer I continue to take my duty of allocating capital to the best of my ability seriously. I’m ultimately interested in increasing the output of this machine, in the form of increasing dividends, and to that end I completed two transactions.

Near the start of September, I added to my position in General Electric Company (GE). I think the investment case is compelling, and I believe management is doing what’s necessary to ensure the GE of 10 years from now is far better than the GE of 10 years ago. It’s not every month that I have enough capital to buy stock in more than one company, but luckily I felt confident enough about my cash flow this month to make a second purchase. Toward the end of the month, I acquired shares in a small food company – Armanino Foods of Distinction Inc. (AMNF). This is a totally new and exciting investment for me, and I’m anxious to see how this decision turns out ten years from now.

What’s amazing is that AMNF is now the 50th stock in my portfolio! It’s been a crazy and wonderful journey thus far, and I’m just as excited today to keep this snowball rolling as I was when I first started back in early 2010. Every month gets better and better from a capital allocation standpoint, because the portfolio continues to spit out more and more dividend income with every stock purchase I make. It’s like giving a kindergartner a task to color a massive coloring book, and then giving that student more and more crayons every month. The job just gets easier and more exciting!

The current market value of the Fund now stands at $170,704.39, which is a 0.3% decrease from last month’s published value of $171,328.09. This decrease largely tracked the broader stock market, which was down by 1.55% for the month of September.

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I’m actually quite pleased with this result, as a falling portfolio value means stocks are getting cheaper. Cheaper stocks means I can buy more shares with the same amount of money. More shares means more dividends. And more dividends means I’m that much closer to financial independence!

I’m looking forward to continued volatility in the market, and I’m hoping for even cheaper stocks from here. I wouldn’t mind at all reporting another decline in my portfolio value next month if that means my current available capital – which is more limited now after my recent career change – can go even further. We’ll see what we get, but I’m hoping to have great cash flow numbers in October so that it’s possible to complete two stock purchases once again.

I’m currently invested in 50 companies. This is an increase since last month, as I initiated a position in AMNF.

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 GE and AMNF.

What about you? Have a great September? Is your portfolio performing as expected? 

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

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126 Comments

  1. Well, I seem to be first. You are really doing well for yourself. Good job on the GE purchase- I happen to be somewhat partial to that holding. Hopefully, the dividend increase comes to about $.03 so we get to the magic $1.00 level. Always good to break to another number. Anyhow, good job, and I will be looking forward to seeing you break to your next level.

    Keep cranking,

    Robert the DividendDreamer

  2. Jason, nice progress in your wealth building progress. I love reading your updates. It’s really nice to read old blogs, it proves this method is working. Keep up the good work!

  3. Nice job Jason. The portfolio is working for you, even while you weren’t working. I know that’s the point, but it’s nice to see all the same. I also like falling values. I more than doubled our position in Mattel, as the price fell. Those days may be over however, as yesterday looks like a key reversal in MAT. Keep up the good work and I’ll catch up with you in November. I’m curious how you’ll spend your time, now that you’re back in Sarasota.
    -Bryan

  4. Isn’t great to know that you have a portfolio that is working for you? It sounds like the warm weather in florida will keep you going pretty strong this winter.
    Best of luck Jason.

  5. Looks like another solid month, despite the very small drop.. especially considering that drop compared to the overall index’s larger drop. You reiterate a great point often missed by investors seeking to focus on income rather than growth: The actual value of the pot matters far less than the dividends it returns. Lower value = cheaper investments, more dividends!

    Amazing how quickly September seemed to go by. Here’s to a successful October!

  6. Great job Jason! I think its pretty telling to see that dgi is usually less volatile than the overall market with your portfolio only declining 0.3% compared to the 1.5% for the stock market. Like most everyone else I didn’t see your last purchase coming but it looks to be pretty solid. Keep up the good work!

  7. Jason,
    Do you track current annual dividend of your portfolio? It would be an interesting metric to see alongside the total portfolio value each month. The value of your freedom fund may decline for a month but expected annual dividend should never go down.

  8. Great job!
    Honestly, I don’t watch our freedom funds that closely. I contribute monthly and let it grow, but I’m not much of an active investor. We buy index funds. I like to check in from time to time to see how we’re doing, but that’s about it. I know the last 18 months have been phenomenal overall.

  9. Great job, as always. The fact that your portfolio value dropped only 1/5th of the amount the broader market did is a tribute to the quality of your portfolio, and I’m sure the diversification of said portfolio helps a lot. Keep it up!

  10. Robert,

    I noticed you were partial to GE. Want to trade position sizes? Pretty please? 🙂

    Appreciate the support!

    Keep up the great work over there.

    Best regards.

  11. Dutch Dividend,

    Thanks for stopping by!

    I’d like to think this is proving the process out in real life. I still have a long way to go, but every month that passes is a step in the right direction. 🙂

    Let’s keep it moving onward and upward!

    Take care.

  12. Bryan,

    Exactly! Money works 24/7, which is good because I require sleep. 🙂

    I hope MAT works out for you and all the other investors. Let’s hope kiddies still want traditional toys for a long time to come.

    It’s definitely great to be back in Sarasota. Claudia and I have been spending more time together over the last few days than ever before. We eat breakfast and dinner together now, which was very difficult before because of our schedules. And we’re looking forward to spending more time at the beach as well. I always hated living so close to this beautiful beach (we’re about 15 mins away from Siesta Beach), yet always being too busy to see it. Things are looking up!!

    I hope it starts drying out for us here pretty quick.

    Thanks for dropping by!

    Best wishes.

  13. KeithX,

    Awesome!! Glad to see we’re on the same page. I think GE will serve us well over the long haul. I truly believe the next decade will look a lot better than the last decade did. The valuation is far more favorable these days, and the business is more streamlined. Bodes very well for shareholders like us.

    Cheers!

  14. DM,
    Good to see your progress and the portfolio slowly but surely approaching $200k. I’m curious, now that you’ve reached 50 stocks, are you ready to stop adding new positions and simply add to existing? Or are you looking to go forward to 60 or 70, or hover around 50? I believe I read previously that 50 was your limit, but perspective can change once you reach a goal.
    -RBD

  15. John,

    Thanks! I think the warm weather will keep me motivated to keep pushing things to the max, although that warm winter sunshine may also beckon me outside here and there…which is a good thing. And it’s good to know we have portfolios working for us even when we’re off having fun. 🙂

    Best wishes!

  16. ERG,

    September definitely flew by! I was really busy and there was so much going on. I’m looking forward to slowing things down a bit now, and thus far my days have moved much slower since returning to Florida. Life is good! 🙂

    And it’s definitely all about the growing income, not the value of the portfolio. The portfolio value will naturally rise over long periods of time because great businesses will be worth more in the future than they are today, but the increasing dividend income the portfolio generates is what will sustain our lifestyle.

    Best regards!

  17. JC,

    Well, the portfolio decreased about the same as the broader market after factoring in the capital I added. It declined less than 1.5% because I committed fresh capital to GE and AMNF. But as I stated in the post, it more or less tracked the broader market after you factor that out, not that it really matters. 🙂

    Thanks for stopping by. Keep up the great work over there!

    Best wishes.

  18. Gunnar,

    Exactly. The dividend income should never go down, although multiple dividend cuts/eliminations all at once could cause an issue. However, I think with 50 holdings, it’s unlikely I’ll actually experience a drop in annualized dividend income.

    I track the expected dividend income, but I don’t post it because it hasn’t occurred yet. I post my dividend income as it’s received because it’s money paid and in the bank.

    Take care!

  19. Holly,

    Yeah, the last 18 months have been great for anyone who’s largely invested in stocks and after rising portfolio values. Bond investors, however, probably haven’t fared quite as well. But I’m 100% in stocks, so things are good in regards to the portfolio’s value. However, I would have preferred a flat 18 months which means the capital I invested over that time frame would have been able to buy even more equity in great businesses. But I suppose things could be much worse. 🙂

    Thanks for stopping by!

    Best wishes.

  20. Hey Jason,

    The great thing is that a dip in stocks won’t change your lifestyle at all since you plan on just living off the income! That drop reminds me to go and check to see if the ROTH transfer is complete… gotta get some stocks!

    Keep up the good work!

  21. DD,

    Well, the portfolio dropped in value less than the broader market’s drop because of the purchases I made. Adding capital to the portfolio via stock purchases in GE and AMNF of course buoyed the portfolio’s value, and kept things almost afloat. Don’t forget to include purchases if/when you track your portfolio’s performance. I don’t track my performance against a benchmark, so these posts are more of a historical record than anything else for me. 🙂

    Thanks for dropping in!

    Cheers.

  22. RBD,

    Thanks! Slowly but surely is the name of the game. 🙂

    That’s a good question there. Back when I first started thinking 50 was probably a good limit for me, I had a full-time job in the auto industry to contend with. I now have a little more free time (not as much as you’d think, though), which should allow me to manage an even larger portfolio. I don’t want to get crazy with it, but I’m not going to hold back from investing in a great business if I think the valuation and prospects are excellent. And that will remain true whether or not I already have a position in said business. So we’ll see!

    Best wishes.

  23. DM,

    Only dividend investors will be pleased with falling market value. Last month my portfolio dropped slightly first time in 7 months, but dividend increased bit more than I expected. Looking to add more positions in the coming months.

    Happy investing

  24. RBD,

    My days were crazy back up in Michigan, and it was difficult to formulate a routine (not that that’s a bad thing). Back home in Florida, time is moving along much, much slower, which is just how I like it! I’ve had a nice, long morning already and I’ve still got the whole day ahead of me.

    Cheers!

  25. DM,

    My portfolio saw a decrease overall too, definitely due to the effects of the broader market. Whatever, it is more for less for us buy and holds. What will you do if one of your stocks splits into 2 companies? Will you sell one or just sit and wait? I look at your portfolio and wonder about OGS specifically, as it was such a small split addition. Thoughts of turning that into a real position, or just let it hang around for awhile?

    Also, any plans to work part time or something at a less stressful job back in FL? I am sure there are some fun or interesting jobs out there (it is Florida, there has to be something cool there), and they would allow you to reach that level of dividend output you want faster.

    – Gremlin

  26. FJ,

    I’m with you. Cheaper stocks gives our fresh capital a boost, and buys more future dividends for the same amount of money. Increasing dividend income is ultimately what we’re after, so I am hoping for cheaper equities over the coming weeks. 🙂

    Thanks for dropping by!

    Take care.

  27. Gremlin,

    I don’t mind when stocks split, as usually both sides perform quite well. OGS is far too small for me to profitably sell, and far too new of a separate company to formulate any type of investment thesis. I always consider future prospects of splits on a case-by-case scenario, but more often than not I’ll just end up keeping both sides. For instance, I regret selling ABT and ABBV. Although I did well with the capital from the sale, I should have just kept what I had. In the end, a split or spin-off still gives you the sum of what you had before. If I like the sum of a business as one company, then it seems appropriate that I should still like the sum of the parts split into two companies. Again, I always consider this case by case.

    As far as a job goes, no. I have no plans whatsoever to apply for any regular jobs. I’m really enjoying what I’m doing, and I’m taking on additional opportunities to scale things further. I’m currently saving almost 50% of my net income while focusing on writing and other online endeavors, so I see no reason to ruin that by taking on a part-time job that will probably pay less and be much less enjoyable. I would only consider a part-time job if my online ventures took a massive turn for the worse, which I find highly unlikely. I’m incredibly lucky to write for a living and I’m chasing this dream with all I’ve got. It’s wonderful that I get to do what I love and I’m also getting close to fully replacing my old income. 🙂

    Thanks for stopping by!

    Best wishes.

  28. Jason,

    Great job, as always! Even with a falling stock market, you were able to grow your freedom fund. Amazing to think you’re all doing this without a traditional full-time job. I’m glad to be a fellow shareholder of GE, which I also picked up last month.

    The appreciating Dollar and depreciating Euro actually outpaced the drop my US stocks experienced, so my US positions are up across the board in my home currency, ha! That means higher dividends in my home currency, but now buying US stocks has become more expensive. You win some, you lose some, I guess.

    Also, I forgot to comment on your previous post about you moving back to Florida with Claudia. So happy for you!

    Keep at it, pal,
    NMW

  29. Who doesn’t love a discount on great companies? I know I sure do! I’m really looking forward to the next several months as my capital available for DG and P2P Lending will be going up nicely. I’ve got quite the watchlist so being able to fill up on some of those positions will be great.

  30. I also had a bit of a decline overall in investments; however, I have been adding to positions through my 401k and a few ETFs in my brokerage account (mostly due to not having enough to make a stock purchase).

    Remember when we all thought Dow 16k was high? 🙂

    I do see more volatility in the 12 months ahead, so hopefully that means some more buying opps will come along. With weakness in Europe and Brazil and all the jazz going on in Russia and even a slowdown in China (just slower growth most likely), there are bound to be some items that get pushed into a value range.

  31. I didn’t comment on your last post, but congrats on moving back in with your GF 🙂 interesting to see where your portfolio goes now you’re at the magic 50 positions! I wonder whether the temptation to invest in another company will get you any time soon? Looking forward to seeing when your total tops the $200k mark 🙂

  32. DM,

    You are one “Steady Eddie” I love your continuous monthly portfolio improvements. As far as stocks go, I agree that GE is looking very good right now. Keep up the great work!

  33. The Freedom Fund is growing nicely. Congrats on the move back to FL. I’m a southerner but temporarily living up in your old stomping grounds for my position. I miss the southern weather and friendly people, so I can’t wait to get back.

    I’m excited about the possibility of lower stock prices as well.. I’m saving up some capital to make some more purchases this month at, I hope, a sale price.

  34. Jason, I am currently waiting for those days to come my way. I have seen them a few times, but they are few and far between for me. Good luck.

    Keep cranking,

    Robert the DividendDreamer

  35. GE seems to be a common theme as of late. Hopefully, theu come through with nice earnings and a big dividend increase. I feel the dividend increase alone will be a shot in the arm for the stock price.

    Keep cranking,

    Robert the DividendDreamer

  36. I did forget completely, especially since I didn’t make a purchase last month. Thanks for the reminder!

  37. Our dividend portfolio took a hit in September as well but I’m not too concerned. You and our dividend incomes are growing nicely and that should be the most important thing. It’s important that we continue adding more stocks into our portfolios. Keep it up.

  38. GE seems to be the soup du jour as of late. Hopefully all the baggage is behind us. GE is on the cutting edge in many fields. It seems to be a matter of time before the company starts to click. A new CEO and a shakeup of the board would probably help, but it takes time to right a ship the size of GE. It seems like the ship is now righting itself. I plsn to stay the course. I am waiting to get my dividends back where they were pre-recession.

    Keep cranking,

    Robert the DividendDreamer

  39. It seems that recently there have been good news and bad news for the market, and lot of investors don’t rely know where market is going, this brings more volatility on the markets, so we need to be sharp and looking if something is falling too much without a good reason. Very good for dividend growth investor.
    I had a good selling frenzy on September and i did get rid of all my “growth” positions, now aiming for more dividend income oriented portfolio.

    When do you think you hit the 200k mark?
    cheers

  40. The portfolio is looking good. I was looking at GE and the PE is around 20. Isn’t that a bit too high? Forward PE is around 14 so I guess that’s not too bad. Maybe I should buy half now and half later.

  41. I also don’t see why you couldn’t go higher than 50 as I’ve seen you post a watch list of other companies you don’t own yet and there are several worth owning.

    I’m curious if you had to pick just 10-20 companies and only those, balancing stability and growth potential, what a list like that would look like? I’m guessing not just a bunch of JNJ, KO, XOM, GIS, etc, but maybe some strategic V, ROST, etc?

  42. Our portfolio also declined by about 2.5% after recording a;; time high about 1.5 months ago, on the other hand dividend income in Sept was all time high about $1,600 …
    Jason, I don’t remember if you hold KMB….in any case what do you think about upcoming Nov 1 KMB spin off?
    P.S. what are you buying/watching right now?

  43. Another month, another update. Always love reading these updates from the DGI community and see how we are all doing. Each month, seems to get better and better as we are all excited about that passive income earned. Your update is no different and a continual inspiration. I want to know if you plan on adding company 51 or 52 if you see a great opportunity present itself. How hard are you to sticking with a 50 stock portfolio? Thanks for sharing and look forward to more updates.

  44. NMW,

    Thanks so much. It is crazy that I’m still able to keep the forward progress moving even without the safety of the full-time paycheck. Things are going better than I ever imagined. I’m blessed.

    Appreciate the support there in regards to the move. The personal life and professional life are now firing on all cylinders. Look out! 🙂

    Keep up the great work over there. You’re doing really phenomenal, especially for your age.

    Cheers!

  45. W2R,

    Oh, you’re available capital is increasing? That sounds fantastic. I look forward to seeing your trajectory improve even more. 🙂

    I hear you on the watch list. Not only do I have 50 stocks in my portfolio, but I also track another 20-30 stocks on top of that. Good thing I really enjoy this!

    Thanks for stopping by.

    Best regards.

  46. Ravi,

    Hey, a decline in your portfolio value is a great thing if you’re actively adding capital, which you are. 🙂

    I hear you on volatility. I certainly hope you’re correct. I don’t have an elephant gun or anything, but my little pea shooter can certainly do a little damage with cheaper stocks!

    Take care.

  47. A healthy decrease in the broad market is always nice. Today it took a nice dip…time to back up the truck and buy more shares!

  48. Nicola,

    Thanks so much! It feels great to be back. The love life and professional life are humming along very nicely. 🙂

    I’m not limiting myself to 50 positions as a hard line. I came up with that number as a strategy to limit substantial loss of income in early retirement; 50 positions means one or two dividend cuts/eliminations could easily be absorbed after factoring in the other 48 or 49 dividend increases. And I was working a full-time job back then, so it was hard to track more than 50 stocks. I’ve been unleashed a bit now, however.

    Thanks for stopping by. Hope all is well over there for you!

    Cheers.

  49. MDP,

    Thanks!

    Consistency is the name of the game. I don’t make a ton of money, and I don’t have any inside connections. But I have tenacity, consistency, and relentlessness on my side. 🙂

    It seems you do as well with your weekly sharebuilder buys. You’re killing it! Keep it up.

    Take care.

  50. SAD,

    I hope you’re able to get back at some point. The weather is always a big factor for me. I once heard someone say they were “solar powered.” I’m the same way! 🙂

    Hopefully, we’ll both have the opportunity to buy stocks on sale. Looking forward to it!

    Cheers.

  51. Anhalinvesting,

    Glad you’re more focused on income. I think you’ll find it much less stressful than chasing after growth stocks. 🙂

    I’ll most likely hit the $200k mark in the middle of next year, if the stock market doesn’t change much from here. However, stock market volatility now has a material impact on the value of the Fund. So that timeline could change quite a bit. We’ll see how it goes!

    Take care.

  52. Joe,

    GE’s TTM P/E ratio is actually closer to 17. Whether or not that’s attractive is up to you, but the thought is that once it’s more streamlined and more of an industrial play the P/E ratio the market applies to the stock will rise. Financials, like GE Capital, typically are awarded lower P/E ratios (look at banks), which is thought to weigh on GE. However, I’m not really after a P/E ratio expansion; I think the company will grow over time and continue raising the dividend. What the market thinks about that is really irrelevant to me.

    Best wishes!

  53. Sundeep,

    Hmm, I don’t think I could pick just 10 or 20. My brain doesn’t work like that. I mean I could probably just start selecting great businesses and stop at 10 or 15, but my thoughts wouldn’t be complete. I don’t see a need/desire to limit oneself to that little. However, 50 or 60 stocks isn’t necessary either. Really all depends on what you’re comfortable with, but I would think 25-30 stocks spread out across sectors and geographies probably diversifies you pretty heavily.

    Best wishes!

  54. gibor,

    That’s fantastic dividend income! It’s going to be a few years yet before I’m hitting numbers like that. Enjoy. 🙂

    I took a quick look at KMB for DTA a few weeks ago:

    http://dailytradealert.com/2014/09/22/this-stock-has-raised-its-dividend-for-42-years-in-a-row/

    Revenue and EPS growth hasn’t been very impressive over the last 10 years. The dividend raises has been pretty solid, but the dividend is growing faster than earnings. So either EPS will have to grow faster or the dividend raises will slow. The business model is certainly easy to understand, and the yield is pretty solid. Overall, it seems okay. I think it’s roughly fairly valued.

    As far as what I’m watching right now: ARCP, TRV, HCC, and O. BAX has also come down a bit. And DE still looks interesting. BBL is another one that’s been incredibly weak lately, and the yield is pretty enticing.

    I hope that helps!

    Best wishes.

  55. DivHut,

    I agree. It’s awesome to see other investors in the community consistently investing and seeing the success that comes with that. This community has grown leaps and bounds since I started documenting my journey back in early 2011. It’s really incredible and wonderful. 🙂

    I’m not sticking hard to 50 stocks. That was a number I put together when trying to think of how to limit the chances of overall income loss once I’m living off of my dividend income. Furthermore, I had a full-time (and then some) job to contend with earlier this year, which naturally limited how much time I could devote to tracking my portfolio. I didn’t want to get in over my head. But I now have more time, so I have no problems going past 50. I’m not going to pass up on a great investment due to some arbitrary position number.

    Thanks for stopping by!

    Cheers.

  56. Spoonman,

    I’m with you! I actually added to one of my positions earlier today. I’ll be posting about that pretty soon. Always glad to buy cheaper stocks!

    Happy shopping. 🙂

    Best wishes.

  57. gibor,

    Seems like a good move to me, but it doesn’t make a big difference either way. It’s a small part of the business.

    In the end, it’s a different business from their core competency. So I like them moving away from that and allowing it to be independently operated. Might make a good acquisition for a larger player because it’ll be a fairly small company. However, I also said the dividend raises will likely slow. And the CFO reiterated that dividend raises might slow even more after the spin off. Something to think about.

    Best regards!

  58. Jason –

    Your growth of the fund is impressive, but I am wondering why the diversification beyond 25 to 30 companies in a portfolio makes sense. However, I can’t argue with the results. Have you tracked against a dividend ETF? Best of luck. Keith

    (in Oxford, Mississippi where we are getting ready to beat Alabama (I hope, well you have to have hope in everything).

  59. Welcome back to Florida!

    You seem to be doing well Jason, on all fronts.

    Good call on the GE. I just keep this one DRIPping in my account. In another 15 years, I’ll live off the income. This stock should yield enough to pay by then to pay for gas money in our car every month and quarter.

    GE, imagine! 🙂

    Mark

  60. I was tempted this afternoon, but it is October and that is always a very difficult month for me. Most of my bad timing purchases occurred early in that month. I am going to give it a little bit.

    Keep cranking,

    Robert the DividendDreamer

  61. Mark,

    Thanks, bud. It’s good to be back. 🙂

    I’m with you on GE. Imagine living off of dividends – that’s the kind of motto I can get behind!

    Thanks for stopping by.

    Best wishes!

  62. Good update. For me all is boring since I don’t do a lot apart to collect dividend. I push cash aside for Oct/Nov this year, even if there are already cool dips on the TSX. Canuk oil stocks take a beating, as each year. Patience is the key, fear is our bargain. Keep up the good work.

    Cheers!

  63. This is so inspiring. Since you’ve reached your goal of 50 businesses, how will you decide on which companies you’re going to put more capital into? It’s always great to see your progress

  64. Progress! I love your attitude, and that of most long-term investors. Funny you increased your GE position. I just purchased some shares last week. Looking forward to getting more dividend bearing stocks, sites like yours has helped with the search, so thanks!

    – HMB

  65. I don’t know what to think about GE. It’s certainly changing it’s business portfolio dramatically, so it’s tough to get a pulse on them based on historical data.

    The buyback and dividend means returning 4%+ to shareholders, but I can’t justify paying $25+ for a share. I would be interested in owning them someday, but not right now. GE’s pre-tax earnings rate of 5.6% isn’t great compared to many other companies trading at better values with far less debt and uncertainty.

    From a dividend and buyback standpoint, however, this is certainly a great addition to any portfolio. It’s just a little steep for me!

    As always, great post Jason. Your portfolio is an amazing testament to the power of investing!

  66. The Lion’s Shares,

    Thanks! Glad you’ve found some inspiration here. That’s the main reason I share all of this. 🙂

    That’s a good question there. I constantly consider which companies I’m over/underexposed to and also which stocks are attractively valued. If I find I have room in my portfolio for a particular stock (I’m not already overexposed, which is subjective) and the valuation appears attractive (also subjective) then I’m likely to buy (assuming I have available capital). In the end, I try to keep in mind that overexposure is just temporary as I’m still building my portfolio out; however, I also don’t want to tip my weighting too heavily toward one or two stocks now as there’s always the possibility that new capital could dry up and it may have to remain “as is” for a while. Furthermore, a company may not perform as expected, and a heavy weighting toward a dud could set me back for a while. I always want to remain diversified appropriately.

    I hope that helps!

    Best wishes.

  67. HMB,

    Happy to be a fellow shareholder with you in GE. I think we’ll be served well over the long haul. 🙂

    I’m glad you’ve found some of my progress/information helpful. I wish you the best in building up your portfolio!

    Take care.

  68. Congratulations on moving back to Florida. I hope everything works out for you. AMNF looks interesting and I was surprised to see you adding a small cap. Good luck on your investment!

  69. DM –
    Hopefully this isn’t too off topic, but seeing your watch list made me wonder what goes into a buy decision – specifically are you trying to evaluate which is more likely to see higher/lower prices in the medium term ?

    As a simplified example let’s say you think within 6 months interest rates will be a quarter percent higher – at that point TRV probably has a higher price than today and O probably lower than today. Meaning you should buy TRV now and wait to buy O in the future.

    Just curious if there’s a ‘relative timing’ aspect involved in deciding between stocks on your list.

    * I do own both TRV and O and the above would probably be my reasoning if I had to add to one or the other tomorrow.

  70. Nate,

    I hear you. GE isn’t for everyone. I think the prospects are quite bright, but there is execution risk there.

    I appreciate the support. All of the reports I release are designed to show exactly that – the power of regular and consistent saving/investing. A little goes a long way when you’re at it every month. 🙂

    Best regards.

  71. Mongrel,

    Thanks so much. I really appreciate the well wishes. Things have been really wonderful so far. Claudia and I picked right up where we left off and then some. It’s been very nice.

    AMNF is indeed interesting. I’m actually hoping I might get a chance to add to my position. If I can average down I’ll be very happy. 🙂

    Thanks for stopping by!

    Take care.

  72. pacer45,

    That’s a good question there. I honestly don’t try to anticipate such moves. I’d be lying if I said the thought doesn’t hang out somewhere in the back of my head, but the thoughts in the front of my head ultimately revolve around whether or not the stock I’m buying today will be able to produce the income and growth I need.

    Interest rates are probably going to rise over the long haul, and that’s because they really have nowhere else to go. But when is that going to happen? What does that look like? I have no idea, and neither does anyone else. Furthermore, it’s out of my control.

    And there’s a lot of research out there that has shown that REITs don’t necessarily perform fundamentally worse when rates rise. I read some research on that not long ago, and it appears that most of the stock shock associated with REITs have more to do with investors trying to time buys/sells with interest rates more than any fundamental issue with their performance.

    So I think there will be a long-term trend there. But when does it start? How fast will it be? And will that really cause any issues for any of the stocks I follow?

    I know that whether rates go higher or not, O will own the same commercial properties and collect the rising rent associated with their leases. Their borrowing costs will go up, but that’s the same for everyone else. It’s not like their tenants will stop needing shelter simply because rates go up.

    And rising rates probably bode well for insurers. But what happens if rates rise too fast? What happens to insurers’ bond holdings? Can they move quick enough to adjust for that?

    I don’t really worry about all of these questions. I instead worry about what a particular company might look like 10 or 20 years from now, and whether or not I think the odds are high they’ll be far more profitable and sharing that bigger profit pool with me.

    I hope that helps!

    Best wishes.

  73. Hi again,

    I wanted to ask you two questions but not go off your other posts topics. This post is more appropriate I think. I also think you could actually create 2 posts on these questions.

    The first : with 50 stocks and your comments that you would buy more has anyone asked if you felt you were going into “closet indexer” territory? I have read articles that claim that people with over 30 could already be considered that. With 50 stocks you could probably find a low cost dividend paying ETF or two that replicates a good number of your holdings with a lot less work.

    The second question is regarding dividend vs. value stocks with no dividend. I have many times heard the argument that they are really no different from one another. Every time a dividend is paid out the share value drops equal to the payout. You can easily see that when chart out your stock. In a value stock the value of the stock simply increases as profits are made. I would just like to hear your take on this. We all like to see that payout every month but in the long run is it really a superior way to invest?

    Thanks for your comments as usual.

  74. Henry,

    It might have been a flat month for our portfolios, but it certainly wasn’t for dividends! I’m excited to share that report here pretty soon. 🙂

    Happy shopping!

    Cheers.

  75. You seem to be having a blast in Sarasota. This post sounds so happy!

    I’m quite pleased with the dip in stock prices right now. Got my little BB gun out and I’m ready to fire!

  76. Paul N,

    Those are good questions!

    As far as investing in an index fund vs. what I do now, I already discussed that before:

    https://www.dividendmantra.com/2013/04/why-i-vastly-prefer-dividend-growth/

    I don’t view what I’m doing as “closet indexing” at all. One major difference is that when my portfolio crosses seven figures (which is bound to happen in the next couple of decades or so) I won’t be paying any fees at all. I’ll be collecting all of my dividend income with no interference from a fund, and I’ll be paying zip nada for the privilege. I compared VIG to my strategy in that previous post, and that fund charges a .10% expense ratio (down from .13% when I compared it last). At $1 million, I’d be paying $1,000 per year in fees for the “privilege” of receiving less income (its yield of 1.91% is significantly less than my portfolio yield of 3.4%) and less regular dividend growth (its payout history speaks for itself).

    As far as your second question goes:

    “Every time a dividend is paid out the share value drops equal to the payout. You can easily see that when chart out your stock.”

    Maybe you see something I don’t. Here’s a link to PEP’s chart YTD via Google Finance:

    http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1412222165420&chddm=73899&chls=IntervalBasedLine&q=NYSE:PEP&ntsp=0&ei=08wsVKihNpLV8Qbj54GoDQ

    If you can easily point out their ex-dividend dates, you see something I do not. All I see is a steady march upward from left to right, with normal breaks and interruptions that don’t seem to at all coincide with dividend payouts. Stocks are adjusted by the exchanges to compensate for the dividend, but that doesn’t mean it has any long-term impact on the stock’s price. This is where academia and reality diverge, in my view.

    I’m not here to convince anyone that this strategy is superior. I’m simply putting rubber to the road and showing how financial independence is achieved in the real world using actual cold hard cash from rising dividend payouts, where I won’t have to worry about what Mr. Market thinks my equity stakes are worth. I won’t be selling shares in an index fund or worrying about the stock market at all. Dividends flow directly from the companies to shareholders, as a result of business performance. Stock prices are obviously substantially more complicated than that, with far more parties involved and factors at play. As I’ve said before, I can’t buy stuff down at the local Net Worth Store with my brokerage statement. I buy with cash, which it just so happens is the currency dividends are paid in.

    Best regards!

  77. Seraph,

    Glad it came across as happy. That’s how I feel right now! 🙂

    I hear you on getting ready to shop. We may not have elephant guns like ol’ Uncle Warren, but our little pea shooters can certainly do a little damage.

    Have fun bargain hunting.

    Cheers.

  78. I’m glad to see your steady progress. Long-term dividend investing isn’t for the impatient or the “get rich quick” investor, but when you’ve got a plan and consistently invest month after month and year after year, then that dividend snowball grows into something mighty indeed! Keep at it!

  79. Our September looks like it was just fine–we’ll have to pull together all of the numbers and assess this weekend. Glad to hear all went well for you this month too!

  80. Hi Jason

    Just a quick link here explaing a dividend payment. This explains what I was trying to write. If I have $100.00 in stock and a $1.00 dividend is paid out and the days gains/losses was absolutely flat the next morning I would still have $100.00. Not $101.00. I’ll get more info and write a longer post later but I’m getting ready for work.

    http://groupssa.com/ex-dividendstockpriceadjustment.html

  81. Great to see the growth you’ve accomplished, I have a long way to go before i hit those numbers. GE is a great stock to have, it’s one of the first I’ve owned. My grandpa gave me 3 shares back in 98, I still have the certificate and let the dividends reinvest, now its close to 14 shares. (I have another 77 shares in an IRA)

    I love the first of the month to see where my investments are and what the forward 12mo divs are expected to be.

  82. DQ,

    I’m with you. It’s definitely not a get-rich-quick strategy, but rather a get-wealthy-slowly strategy. The wonderful thing is you only need to become wealthy once. 🙂

    Appreciate the support. Let’s keep both of our snowballs rolling!

    Best regards.

  83. Mrs. FW,

    Every month is a good month. Every day is a gift, and I’m one month closer to financial independence. Things could be a lot worse. 🙂

    Thanks for dropping by!

    Cheers.

  84. Paul N,

    I understand how the adjustment works. That’s what I was referencing in my comment above. No need to write a longer post, as I have no desire to debate this back and forth. You’ll have to decide for yourself what strategy works best for you and your goals. Only you can decide that.

    Cheers!

  85. Nick,

    Now, that’s a long term investment! 🙂

    I hear you. The first of the month is always nice. Gives us a chance to reassess our position, our goals, and our progress. It’s great to see things are still rolling along.

    Thanks for sharing your story there. I hope those GE shares keep growing for you.

    Take care!

  86. I love GE but an heavily weighted. Thinking of adding more to CINF. Have you taken a look at this?
    Keep writing

    -Jersey Jerry

  87. Jason,
    I read earlier in the comments that you added another purchase yesterday, you should find a way (maybe via twitter) to let us know about your purchase real time before the actual detailed post. I was debating between a couple of options yesterday, and it is usually helpful to see what others are buying real time, to help decide what to go with 🙂

  88. DG,

    That’s a fantastic suggestion! I’ll add buys in real time on Twitter from now on. You can check my feed there for my most recent tweet. 🙂

    Thanks for the idea!

    Cheers.

  89. Jason,
    Great, i will be keeping an eye out on your feed from now on :). I had a suspicion that you might have made this particular purchase yesterday, talk about your readers starting to know you well.
    I ended up buying GE.

    cheers,
    DG.

  90. Hey Jason,

    I’m not looking to debate that with you, I think you misunderstand me. I just asked how “you” would respond to someone who brings up that point?

    Due to a hectic lifestyle I have chosen low cost monthly dividend paying ETF’s as my core holdings. Plus I have purchased some individual stocks as well where i did have the time to put in some research (some choices were good some not as good). I am with you on all your points. I believe that dividend investing helps motivate an individual to invest more because they see all these little payouts and you “visually” feel you are getting somewhere, even if both ways of investing are in reality are equal.

    I have been asked the question I asked you, so all I was looking for was your take on it just for myself to have another point of view or “ammunition” when I debate this with some colleagues. You gave it (sounds like it wasn’t the first time, but forgive me it’s the first time for me) but you confused me with your reply. To me it sounded like you didn’t agree that the payout wasn’t subtracted from the stocks price, but you have cleared that up.

  91. Paul N,

    Nothing wrong with investing in index funds or low-cost ETFs. Typically speaking, you’ll end up with an overall lower income base, lower growth of that income, and you’ll end up paying fees for the privilege. But most people don’t have the time or interest to invest in individual stocks. If I weren’t doing what I’m currently doing I would have just put most everything into a simple S&P 500 index fund, but I feel that’s the inferior way to go for the reasons I’ve laid out in the past.

    Stocks are adjusted downward by the exchange (is this a free market?) on the ex-dividend date, but, again, I can’t see where that has any major long-term impact on the stock’s price. The key question is really whether or not management can invest that capital appropriately if they would have otherwise kept it. Can they improve return on equity by increasing equity (the amount of money they didn’t pay out), and get an outstanding return? Managements of companies that pay out dividends are basically saying “no”. They’re saying they have enough retained earnings (the money that didn’t get paid out) with which to continue growing the business, and any extra would be a waste. So I always find it weird/interesting/funny that so many people who don’t run public companies tend to argue that point over and over again.

    Best regards.

  92. It is nice to see that the value of one’s portfolio increase over time but realistically we can not predict how Mr. Market works. We will go through times where our portfolio’s value is up, and some where we are down(my portfolio is feeling a little low as well) However, there is one thing that will stay constant(at least more constant than Mr. Market) and that is the dividends we bring in from each company. Sometimes i forget the main importance of DGI is not the total value of the portfolio but what the portfolio itself brings me.

    Best wishes Jason, keep killin it!!

    Ace

  93. Ace,

    Absolutely. The value of the portfolio is really for tracking purposes and to give one an idea of the value of their holdings. I don’t track my performance against a benchmark anymore. However, I find this exercise most useful when adjusting the value of my holdings every month. It allows me a refreshing perspective on which holdings haven’t performed well, and which have. And so I start to think about where I might want to add fresh capital.

    But the main purpose is the rising dividend income. I’m excited to post my September’s numbers here pretty soon, which is really the main event. The portfolio update is like the preview, or a warm-up act. 🙂

    Thanks for stopping by.

    Cheers!

  94. A-G,

    It’ll definitely be interesting to see what October brings us. It’s already starting off kind of volatile, which bodes well. I’m excited!

    I’m grinding away over here. I hope you are as well! 🙂

    Take care.

  95. Jason – Great job on the site and I’m happy for you on the personal front that you are back in FL (BTW – I live in Tampa, not too far). My question is a little off-topic, When you suggest/believe that dividend growth investment is better than index funding, if that is the case, why havent we seen any money manager beat the market consistently for a long period of time (apart from a few)? and why aren’t there any index funds which are purely dividend based funds or even ETF’s? I understand its your passion and you like to do what you do, but if history has anything to go by, we havent seen very successful portfolios apart from a handful.

  96. SKRL,

    “and why aren’t there any index funds which are purely dividend based funds or even ETF’s?”

    There are index funds that are pure dividend based funds. Vanguard, the most popular index fund purveyor, has at least one that I know of: VIG. I don’t know all of them, because I don’t follow index funds closely, but I’m confident there is more than one. And I’ve already discussed why an active dividend growth strategy would be better than buying VIG blindly.

    Warren Buffett has already argued the EMH pretty exhaustively, so there’s nothing I can really add. You can read the body of my work to find out why I invest the way I do.

    I will add that one big reason why many investors in actively managed funds trail the broader market a lot of times is because of big fees. Of course, index funds have fees as well. Once I accumulate my asset base, which should be complete in less than 10 years, I’ll be paying minimal to no fees on an ongoing basis.

    Cheers!

  97. SA articles by David Van Knapp review the many Dividend funds and ETF’s. He wrote one just today.
    http://seekingalpha.com/article/2537345-are-schd-and-nobl-good-dividend-growth-investments

    Like DVK and Dividend Mantra, I prefer to buy and hold the actual company. After the one time broker fee, I earn money without paying any 12-b fees or other charges. Plus I am controlling my own destiny (for better and for worse). But, I do appreciate the Schwab fund profiled above. It provides my family an option once I give up the hunt.

    by the way, both Dividend Mantra and David Van Knapp write on Seeking Alpha. Its a great place to learn.
    thanks to them both for their selfless contributions.

  98. October is the month that has seen most of all the biggest action-if you know what I mean. Since I was a young guy, October has been the month that everyone can’t wait to see in the books. I am looking to put the rest of my cash to work + the dividends for the month. Might as well get a discount.

    Keep cranking,

    Robert the DividendDreamer

  99. @SKRL

    Your question was similar to mine. Being in Canada, I maybe have a better option of dividend ETF investing then VIG here. When Jason mentioned the payout of VIG…not impressive. A Canadian fund like XDV : TSE. It has a sustainable payout (you can’t really call it a true dividend – funds have “distributions”) of 3.83%. So it’s a little “spoiling”.

    But it’s just as fun to see it spit out $200.00 a month as it is in my individual securities. You are also free to do whatever you want with the distributions. They can be reinvested or paid out in cash (even split to do both) with no trading costs and you can purchase something completely different. It does cost a little more but can reduce that “money manager” risk you wrote about. I bought shares of a stock in Canada in a company in Canada called Reitmans. I saw it had a juicy dividend before I was smart enough to figure out it was a bad idea to buy on yield alone. It’s the only security I ever lost on. 50% and they cut the distribution.

    This is kind of what I do… I put a few months distributions together from my ETF’s then for example there was a dip in Telus (a company kind of like Verizon there) and I bought their shares directly.

    No one is really wrong here, it’s what investing style you are comfortable with, and don’t panic and sell at the wrong times. This is a great discussion.

  100. I was going through this scenario recently to convert my Mom’s Roth IRA being setup for my son. I’ve been looking at trying to capture some very solid payers across most sectors. Things are still a work in progress but here’s the short list I’ve come up with: JNJ, KMI, KMB, T, LEG, SAFT, TD, PG, GE, HCP, BDX, ARG, FAST, BMS, and either AAPL, IBN, CSCO, or MSFT.

    But that’s just what I’ve been looking at.

  101. September has been my best month for dividends received, esp considering I just discovered DGI two months ago, I feel as though things are progressing in a positive step. Had some aggressive moves early on, and I’m watching those closely; I was too anxious to start receiving larger dividend checks. But my account’s dividends are up 25-45% over the last end of quarter. Doubt I’ll be able to match those quarterly increases, but it just shows that things are going in the right direction.

    Glad I found the DGI community, y’all have been fantastic so far.

  102. tuliptown,

    That’s an excellent article. I honestly wasn’t aware there were so many options for dividend ETFs. Very cool!

    It seems SCHD might be a good option for those that would rather invest in a fund. It has a rather interesting payout/growth schedule, though.

    Thanks for sharing that!

    Cheers.

  103. DH,

    Sounds like things are definitely moving along for you. That’s fantastic! 🙂

    It’ll be difficult to keep big percentages up in terms of growth as your portfolio/dividend income increases, but the important thing is that the absolute amounts are moving along as you had planned.

    Keep up the great work. It’s wonderful to see freedom slowly come into view.

    Best wishes!

  104. GE is looking good as it gets near $25. I have been looking at that passively for a few months. I’m not more interested in my Canadian banks stocks and looming to average down BNS, TD or RY.

  105. Nice work DM. My portfolio took a hit too for September. But like you mentioned, we should be happy since we can get more stocks for the capital. Looking forward for the market to correct a bit in the next few weeks 🙂

  106. DGJ,

    Exactly. Cheaper stocks means higher yield. Higher yield means more dividend income. More dividend income means we’re closer to our goals. Life is good! 🙂

    Take care.

  107. Darn, you beat me to 50 stocks! Great job, look at that chart! Can you believe that? Im up to 37 stocks or ETFs and my goal is also 50 positions. When I squirrel enough money away to buy 10 shares of something, its a hard decision whether to buy more in a currently held equity, or to get a new one. Such a dilemma, shopping is so much fun! You are well on the way, congrats!

  108. anne,

    Thanks! It’s been a crazy journey thus far, to be here more than four years later. Been a lot of fun. 🙂

    I hear you on the dilemma there. It’s tough. I basically keep a watch list of 30 or so stocks on top of the 51 I’m invested in. So I’m actively tracking ~80 stocks. It’s a tough call, but I don’t think we need to get it right every single time. Buying stocks routinely and consistently means you’re going to spread the capital out anyhow, limiting the opportunity costs.

    Thanks for dropping by!

    Best regards.

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