Freedom Fund Update – December 2014

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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.

What a November, huh? No sooner wasΒ I was done being thankful for everything that I have in my life that I found some Black Friday specials on energy stocks to be even more thankful for. I celebrated that by averaging down on my position in BHP Billiton PLC (BBL) not long after doing the same thing just a week prior.

But adding to my position in BBL twice wasn’t all of the action for the month. I started November off by adding to my burgeoning position in Unilever PLC (UL), which is a stock I continue to like right now. Not long after, I initiated a position in National Oilwell Varco, Inc. (NOV), which now appears to be ill-timed. I’m not real concerned withΒ timing the market, which is good because I’m no good at it! But I remain confident about the long-term prospects with NOV and the rest of the companies I’m invested in.

Lastly, I sold my entire stake in Sysco Corporation (SYY). I don’t sell stocks very often at all, but I felt the deteriorating fundamentals and overvaluation warranted attention, as I believeΒ my capital can work harder elsewhere.

My Freedom Fund was charging aheadΒ to all-time highs up until the last day of the month, whenΒ the severe pullback in energy stocks sent my Freedom FundΒ tumbling by more than $1,500 in one day. As always, the portfolio’s value means little to me in comparison to the dividend income the portfolio can generate, so cheaper stocks are of course just an opportunity to increase the latter at the expense of the former. And that’s just fine by me.

The current market value of the Fund now stands at $184,197.69, which is a 3.6% increase over last month’s published value of $177,726.78. Things continue to hum along here, though I expect continued volatility in the energy sector for the foreseeable future. And since my portfolio is a bit more heavily exposed to that particular sector than I’d really like, my portfolio’s balance will probably oscillate a bit more than usual as well. However, I remain committed to the long-term journey, so short-term volatility is nothing more than an opportunity.

[show-rjqc id=”14″]

That chart continues to move in the right direction, though a substantial broader market pullback would be most welcome. I wouldn’t mind at all reporting that the Fund’s value had dropped to, say, $165,000 if it meant cheaper stocks were available to purchase across the board. But this will be my last update on the Fund for this year, and I’m very happy with the progress there. You can see the portfolio’s value increased from just under $147,000 to just over $184,000 throughout the course of the year. That’s an increase of over $37,000! It wasn’t all that long ago that I wasn’t even making that much money for an entire year of work.Β The joy of moving from the working class to the investor class, indeed.Β Even better, we still have a month to go.

However, I expect December to be relatively quiet in terms of activity. I was supposed to take it easy in November so that I could replenish my emergency fund, but I did quite the opposite. So I’ll have to make sure to limit my capital allocation to equities throughout the month, and build up my emergency cash to a reasonable and comfortable level. And that level, for me, is at least $4,000, preferably upwards of $5,000.

The Fund now has positions in 51 different companies. This is unchanged since last month, since I sold a stake outright but also initiated a new position over the course of November.

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 BBL, UL, and NOV.

What’s your portfolio up to? Things progressing along as planned?Β 

Thanks for reading.

Photo Credit: BimXD/FreeDigitalPhotos.net

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121 Comments

  1. As always, great job! An increase in portfolio value, combined with some compelling valuations in oil, it’s a great place to be!

  2. 200k is creeping up!! Congrats and what a busy month you had. I like the purchases, especially BBL. Are you going to be able to resist buying if oil keeps falling this week? It makes sense to build that e fund back up, especially after all the buys this month though.

  3. Congrats on all the successes, DM!! After seeing Friday’s energy moves, I’ve been thinking of averaging down on some of my purchases, too.

  4. Jason,
    Your progress this year has been amazing and you will most likely hit $200k next month. At this rate you might be FI before your target age of 40. Keep it up and I hope to me one of those DGI that follow you down that same path. My only question to you is if you will continue to invest in an already beaten up energy sector? Or will you be trying to find value elsewhere? An overweight energy sector could be harmful at this point. Consumers having more money in their pockets means they will be spending on things like electronics, movies, food, and clothing. That is just my opinion, but the energy sector can’t surely keep going down like this. My thinking is it bottoms out right before spring. I could be totally wrong here.

  5. I love the solid upward trend. Btw, congrats on taking advantage of the oil pullback. I keep salivating everytime I look at my energy companies, they are very tempting right now =).

  6. Great progress this year and the consistent upward trend is good. Upward trend is good but the important thing is that the dividend amount is increasing steadily.

  7. This just blows my mind. Your first year you managed a 66% growth, 68% your second year, and now you’re up almost 30% this year. These numbers seem too good to be true, but I suppose you’re logging all of your moves on this site, so it’s all open to scrutiny. It feels like you’re darn near minting money!

  8. Hi Jason,

    Your getting richer by the month again, well done!!…….I’m getting really tempted to add to position in BP given the oil slide, just not sure if the fall is over yet, and if oil slides too low for too long would the oil majors cut the divi, my crystal ball is all foggy πŸ™‚

    Cheers,

    Dave…..

    PS. Novembers living costs came in at 205USD BUT that was still smoking, so far I’ve been 3 days off the ciggies and havent killed a single person or animal yet, shot a few apples of the trees though πŸ™‚

  9. Great upward trends there.

    Any particular reason why you updated your freedom fund at the start of the month rather than the end? You mentioned that this will be your last freedom fund update this year but end of the month wouldnt it be better?

    It’s all minor stuff really but just curious of your reasoning πŸ™‚

  10. Very nice DM! I can remember not long ago I was cheering for you to break 100K and now I’m cheering for you to hit the 200k mark! Very well done. You’ve had a great year DM. Wishing you an equally blessed 2015!

    The Stoic

  11. I love this: “What could you possibly want to own more than your time?” That’s exactly how Mr. FW and I feel. There’s just nothing more appealing than the ability to direct your own days according to what you want to work on and achieve. Congrats on the increases!!

  12. DM,

    Great month. Won’t be long before you break that $200k mark, but that is not the big number of course – the dividend income is. Still it is nice to see that figure grow.

    I liked your sale of SYY this month. Making a sale is always a tough call, but when you can turn around and fund your next great buy its worth it. Those new positions and the recent addition of BBL will go a long way towards helping your bottom line.

    Looking forward to a great end month.

    -Gremlin

  13. I love seeing these graphs, as they accurately represent what happens when you let your money work for you. Over time, people will almost always make money in the stock market (so long as they don’t meddle with their holdings too much without proper knowledge).

    Well done, and keep up the good work…as always.

  14. Hi DM,

    It’s amazing that fund now increases by $7k from month to month. Thanks for reminding us of the amount of the fund at the start of the year too. Everyone talks about how quickly it’s gone, and for us investors it’s a great thing to behold. The trend line of the chart must excite you greatly.

    The $200k mark is approaching now. Is there a month next year which you’re hoping to hit it by or are you happy collecting dividends and the value us kind of irrelevant?

    Congrat’s again Jason! All the best.
    Huw

  15. Where do you think the total amount will be when you officially are financially independent?
    1 million?

  16. Would be interesting to track in a “stacked graph” both cumulative contributions each month as well as current value.

    This may help to demonstrate how much of each month’s change was driven by contributions vs price gains.

    In any case, not really a big deal.. just an idea. Total return and total invested capital both matter in different ways.

    In any event, wow! Huge gains in the past 6 months. At some point, “rebalancing” laggards into new positions is part of what makes compounding work its magic over time as well as selling something that seems significantly overvalued.

    Still looking to overweight energy in the short term, although I will likely reduce exposure (either actively or passively) into other areas. I really want to get into healthcare, but it all just seems relatively expensive; however, it’s been expensive for as long as I can remember. I may initiated into BAX soon, but am hoping to find an entry point for JNJ, KMB, or MCK at some point. I prefer offensive stocks like these instead of “defensives”. Too boring for me. πŸ™‚

    Happy to see the progress. 2014 is shaping up to be an incredible year in terms of total wealth gains, as well as cash flow from investments. It’s difficult to see the big picture each month when I’m looking at my budget and tracking contributions and all that. I do have to admit that with a 70k annual net worth gain since 1/1 and a run rate of 10k in annual investment income is hard to not be incredibly thankful each and every day!

    Happy holidays

  17. Agent,

    Thank you. It was another solid month, all in all. πŸ™‚

    I’m not real keen on going too crazy on energy. But that’s because some of these stocks have a way to go before I’m really averaging down to any substantial degree. For instance, my cost basis in Chevron is near $100/share. Right now, NOV is the only stock I can average down on to any degree of interest, but that’s not really going to be a big bet for me. We’ll see. But I’d rather see some of these stocks come down way more before I get too interested.

    Thanks for dropping by!

    Best regards.

  18. FFdividend,

    Thanks! $200k is indeed coming up. Might hit it before next summer, if the market doesn’t correct beforehand. Of course, I’d rather see a correction and hold that $200k mark off for a while. πŸ™‚

    Take care!

  19. Camille,

    Thank you so much. It’s been a pretty successful year, with the portfolio balance just being one of the many things I’m thankful for.

    I hope we each have an even better 2015! πŸ™‚

    Best wishes.

  20. DD,

    I’m extremely grateful. Things continue to hum along nicely. I should have enough capital for at least one purchase over the course of December, which will allow 2015 to start off very nicely. I’m excited. πŸ™‚

    Thanks for dropping by.

    Cheers!

  21. DM,

    As I’ve been mentioning before and in the post, I’m probably not all that enthusiastic about energy as a whole. The last time oil was this cheap, many of the larger names in this space were also cheaper. And my cost basis is much lower in some of these stocks. So I wouldn’t mind averaging down on some high-quality names, but many have a ways to go before we get to that point. In the meanwhile, I’ll probably allocate capital elsewhere for the time being. My allocation to energy is over 15% now, which is really a bit too high for my comfort level. If CVX drops to below $90 or XOM gets into the low $80s, then I’ll be pretty excited about possibly investing there. But I’ve got a great collection of stocks in the energy space already at what I feel are pretty solid long-term prices, so I’m content. Others might not have the allocation there, which would mean they’re going to invest differently.

    Take care!

  22. Spoonman,

    The graph continues to move in the right direction, even though there are some headwinds there with the ARCP fiasco and the big drop this past Friday. Of course, it doesn’t really matter. Happy to be able to continue finding values in this market. πŸ™‚

    Hope all is well for you guys!

    Best regards.

  23. Tawcan,

    Exactly. What ultimately matters is that the dividend income is increasing. I’ll be posting that update in the coming days. The year is finishing off on a high note. πŸ™‚

    Thanks for stopping by.

    Cheers!

  24. Echo,

    Haha. That’s a huge compliment, to think that the success is made up. I actually could have done better along the way in a few ways, but I’m extremely happy with where I’m at.

    Your comment is one of the big reasons I’m doing all of this. A lot of people just don’t believe that financial independence is attainable in a bit over a decade, starting from $0 (actually below $0 in my case). And on a modest income. But I’m proving that it is possible. And it’s really not all that difficult in a first world country.

    But feel free to check the archives. You’ll see how it all comes together. πŸ™‚

    Take care.

  25. Dave,

    My crystal ball is ALWAYS foggy. I’m going to see if someone can fix it for me. πŸ™‚

    Great month of low expenses there. Your figures make me want to wrap this journey up here pretty quickly and head off to a third world country and call it good. I could do that, but my partner cannot. I think she might be open to the idea, but her son still has a few years of school left. But you never know!

    Keep it up.

    Cheers.

  26. Wow, you’ve had some huge gains in 2014! I know everybody is thinking about when you’re gonna hit that $200k mark! I do echo your sentiment about a pullback, though. It’s nice to see that my portfolio value has gone up, but at the same time, that means many stocks are currently very pricey.

    Looking forward to your dividend income update for November! πŸ™‚

  27. B,

    Well, all my updates are done at the beginning of the month to show what happened over the prior month. But if you look at the date and time of this post, it practically is at the end of the month. December hasn’t even started yet.

    Take care.

  28. Mrs. FW,

    Absolutely. There’s a lot of stuff I could own if I were to cash in this portfolio. A Rolex? New Corvette? New furniture? Certainly a nicer apartment, or maybe even a house? But why would I want to own any of that stuff over my own time?

    That Rolex will keep time if only to remind me that I don’t own mine. No, thanks.

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

    Best wishes.

  29. Gremlin,

    Right. The $200k mark is purely symbolic and means little to my goals, but I won’e lie and say it won’t be exciting to cross it. We’ll see how it goes, but a flat market means I’ll likely hit that figure before next summer. But anything is possible.

    Appreciate the support. I hope you had a fantastic November as well! πŸ™‚

    Cheers.

  30. Steve Adcock,

    Absolutely. If you follow some basic steps to live below your means and allow that excess capital to work for you, you almost can’t avoid being successful and wealthy over time. That’s capitalism for you. Unless you do everything within your power to inhibit your capital’s ability to work for you, like putting all of your money into a crappy company that goes bankrupt, you’ll likely find success and wealth over a long period of time, almost regardless of your investing skills.

    Thanks for dropping by!

    Cheers.

  31. DW,

    These updates show the total portfolio value. That of course includes all of the capital I’ve ever invested, any capital gains, and all reinvested dividends. The only thing it doesn’t show is any cash value, which I usually keep to a minimum anyhow.

    I hope that helps. πŸ™‚

    Take care.

  32. Huw,

    The oscillation in the portfolio’s dollar value throughout the month is now far in excess of the capital I can possibly deposit and put to work. But that’s a great feeling, to know that your capital can work harder for you than you can. πŸ™‚

    That’s a good question there. I actually don’t have a goal as far as the $200k mark, as in a date I’d like to achieve that portfolio value by. I never set goals for the value of the portfolio, but strictly stick to the dividend income goals. The dividend income is what will ultimately unlock freedom for me, so the portfolio value is, as you state, irrelevant.

    I hope you had a great month over on your side of the pond!

    Best regards.

  33. mike,

    That’s a great question there.

    I honestly have no idea. My goal for financial independence has long been $1,500 per month in dividend income – $18,000 per year. Assuming a 3.5% yield across my portfolio, which is reasonable to assume, that puts the value of the portfolio at somewhere around $515,000. The numbers will vary depending on the yield, and a big run-up in the market will stretch values and bring yields down, which means the value may get there before the income. Really just depends, but my success isn’t tied to the portfolio’s value.

    But that number seems fairly accurate. I’m about 1/3 of the way along my journey now, four years into a 12-year journey to FI by the time I’m 40. And my portfolio’s value is about 1/3 of the way to that number.

    I hope that helps! πŸ™‚

    Cheers.

  34. Ravi,

    That’s not a bad idea there with the graph. I’ll be honest and admit I’m no graph wizard, and I actually don’t even really care for charts and graphs. But many readers had long complained about no graphs here, so I added that feature. It doesn’t appear the software I’m using would allow something like that, but maybe I’ll look into it at some point. πŸ™‚

    Healthcare is tough. Rarely do you find cheap, high-quality stocks in that area. MDT and JNJ were both available at pretty cheap prices a few years ago. I regret not buying more MDT at the time. Although, I’m not real happy with the proposed COV merger. That could trigger some tax headaches, so we’ll see.

    I’d say you’re doing great over there. I’d be very thankful for that kind of progress. Looks like you’re setting yourself up for a very, very nice 2015. Keep it up! πŸ™‚

    Best wishes.

  35. I decided to add to BP today, not in a big way but to just follow both BP and Shell down for the next couple of months, BHP is syill on my buy list but I already have positions in both BP and Shell and I;ve taken this opertunity to make them bigger.

    Cheers,

    Dave…

  36. Grats on cracking 180k . 51 holdings now huh. I am around 58 ish. Its a lot to track huh! I swear I take a few hours once a month to do a quick check up on all of them and its starting to take up quite a bit of time to do a health check. What do u plan on capping total holdings at? For me some days I could watch 100 holding and then sometimes I wish I was holding index funds lol.

  37. It’s hard to believe it’s December, huh? Great job on almost completing another successful year with the freedom fund. I’ll be working full time again on 1/1 and I’m very much looking forward to having more cash to add to my portfolio again. Have a great week, Jason!

  38. Buying an apartment is definately not an waste of money/time. I’m planning on gathering +150k with dividend growth investing and then buying an apartment with that money as I’m quite certain that I can get more money by not paying rent rather than from dividends. And then I’ll just start investing again with the money I save from not paying rent.

  39. That’s a beautiful chart right there – just seeing a persistent climb upwards, also reflecting your persistent approach of applying capital to the market, and not saving it up for the perfect β€˜one time’ opportunity. It’s definitely working for you so far!

    I know you’re a little heavier in the energy sector than you’d like, but I think you sometimes have to wear that short term pain of volatility when you’re establishing these positions for the long-term. I’m sure as other opportunities present themselves your portfolio will continue to rebalance, and am confident this short term volatility will be worth it!

    Hoping for one more nice little up-tick for you in December to round out the year! (even though I know it’s all about the dividends!)

    Cheers,

    Jason

  40. Dave,

    Nice! If I didn’t already have a decent position in BP, I’d consider it here. Though, falling oil prices is just one more headwind for them.

    But great job averaging down on what you already know. That’s my modus operandi, over and over again. πŸ™‚

    Cheers!

  41. Seraph,

    I hear you there. A bigger portfolio value sometimes comes at the expense of being able to put current capital to work in advantageously priced stocks. I think there’s still value out there, though it’s harder to find today than it was two years ago. No doubt about that. But current investments increase my cash flow so that if/when there’s a big correction, my BB gun will reload just a little bit faster. πŸ™‚

    The dividend income update should go live Wednesday. Looking forward to putting the report together!

    Best regards.

  42. Zach,

    Indeed! I won’t deny that it’ll feel good to cross a milestone like that, but I’m also hoping to delay it just a bit so that I can continue to buy cheaper stocks. πŸ™‚

    Thanks for dropping by!

    Best wishes.

  43. A-G,

    That’s a good question as far as capping it out. I don’t have an exact number in mind per se, but I could see the portfolio holding around 75 names long-term. I think there’s probably another 25 companies out there that I’ll eventually own and probably stop there. I won’t stop because it would be unmanageable, but simply because the universe of of top-notch companies is probably limited to 100 or so. At least, those within my circle of competence and those that routinely and regularly pay and raise dividends. We’ll see how it goes, but 75 sounds like an appropriate number. Of course, the CCC list is growing all the time, so there might be a whole host of undiscovered stocks out there that I may eventually find interest in.

    Take care!

  44. Kate,

    Congrats on landing something full-time. I know you were having a great time there with the reduced load, so I hope it’s something you love. πŸ™‚

    I’m sure 2015 will be a great year for you, as was 2014. Life just keeps getting better!

    Best wishes.

  45. After a banner 2013 I’m sure no one expected 2014 to be this strong as well. Of course, there still is a full month to go and with the recent market volatility anything can happen in that time. But, so far so good. I can’t complain about my portfolio either. It’s always nice to see progress as we move along this dividend growth journey. Like you, I am more concern with increased dividend income rather than just capital appreciation. That’s just the gravy the way I see it. Thanks for sharing this recent update.

  46. niko,

    Depends on your point of view and local market. Stocks outperform residential real estate by a wide margin over the long haul. And a condo/apartment typically comes with property taxes, HOA dues, insurance, maintenance, and repair costs. So dropping $150k on an apartment/condo will not alleviate you of monthly housing expenditures.

    I could have $150k invested in dividend growth stocks spitting out $5,250/year in dividend income. That’s $437/month. That covers about half of my rent. Or I could use it to buy a condo and pay out the $250/month HOA dues, $125/month in property taxes, the $75/month in insurance, etc. So right there you’re about even. But you still have to figure that you’re responsible when things break, there’s liability, the condo is illiquid, you’re not as flexible/free, and the investment will probably not outperform a select group of high-quality stocks over the long haul. Just my take on it.

    The finances could be argued either way. Really depends on your local market. But since stocks outperform real estate by a substantial degree over the long haul while also allowing a ton of liquidity and freedom, I’d rather own the former and rent the latter.

    Cheers!

  47. Jason,

    Exactly. One cannot time the market. The best we can do is consistently purchase the highest-quality stocks we can at any given time, while also trying to also buy those that are cheapest relative to their value. It’s worked for me. πŸ™‚

    I definitely don’t mind going temporarily overweight in a particular sector if that’s where the value is. But my overallocation to energy is now getting a bit heavy, as I’ve been consistently buying the value there over the years. I’m about 50% heavier than I’d like to be, which will take time to correct (even if I stop buying energy altogether). So we’ll see. Some of these stocks – especially XOM and CVX – will have to come down quite a bit before I’d be interested, as my cost basis is below where they sit. Should be fun to watch, though!

    Thanks for dropping by. Appreciate all the support. I hope you had a great November as well.

    Best regards.

  48. DivHut,

    “After a banner 2013 I’m sure no one expected 2014 to be this strong as well.”

    Exactly why I don’t time the market. And why I think it’s impossible for anyone else to as well. 2015 could run up another 20%, or it could drop 20%. Who really knows. I just stay consistent, hunt quality, and pull the trigger when the value is right. πŸ™‚

    Glad you’re having a great year as well. I’m excited to see where 2015 takes us.

    Thanks for dropping by!

    Cheers.

  49. Hi Jason, my portfolio took the bull ride together with Mr Market. I achieved my 2014 goal of $100K a month early but it might go up, down or sideways… Nobody knows, even Mr Market doesn’t. Keep up the good job and keep inspiring!
    Take care,
    FFF

  50. When it comes to averaging down, when do you like to pull the trigger…example – Right now i am down 6% on my CVX position, should I wait until 10%, 20%?

  51. Any feelings on Bank of America? Closed today at $16.79 with a 1.2% yield (currently .20). Andrew Feinberg of Kiplingers seems to like it and is predicting $25 to $30 ps by 2016.

  52. E Man,

    There’s no real exact science with something like that. Really depends on your portfolio size, the amount of capital you’re able to invest, your income needs, your asset allocation, where you think a particular company is going, etc. That said, I start to get interested in averaging down around 5% and I get more excited from there, assuming the fundamentals of the company haven’t drastically changed. And I’m more willing to average down on companies that I have more conviction in.

    I hope that helps. πŸ™‚

    Best regards.

  53. Tom,

    I’ve never really taken a good look at BAC, as it’s not really in my wheelhouse. I think there are a number of great large banks out there already, including WFC, USB, and JPM. So I see no need to gamble on BAC.

    Sorry I couldn’t be of more assistance.

    Cheers!

  54. I’m still sitting at about $5,000, but I just added $50 of UL through a new Loyal3 account. I just felt so terrible not seeing my investments increase every month I thought I’d give Loyal3 a try for these smaller dollar transactions. That and 45% of my net worth is in my 401k which is probably less useful than my house as a liquid asset.

    Keep inspiring the little guys!
    Wallet Engineer
    (P.S. I’m also starting a new blog about the current town I live in, I’ll send you the details sometime)

  55. FFF,

    Congrats on hitting your goal a month early! πŸ™‚

    You’re right. Impossible to say where things go from here. I’m just along for the ride.

    Appreciate the support.

    Best regards!

  56. WE,

    I understand a lot of investors are really digging Loyal3. It’s great that you can put small amounts of capital to work that quickly. I think that’s a great way to go about it if you aren’t going to have substantial capital to put away and invest on a fairly regular basis.

    Looking forward to reading about the town you’re in. You’re in Colorado, if I’m not mistaken? I’d love to check out Denver, Boulder, or Colorado Springs sometime. You never know. πŸ™‚

    Cheers!

  57. For all non-US investors here, I just learned today that Philip Morris is a “80/20 company”. This is a special US tax status for companies that generate more than 80% of their whole gross income outside the US. What this means is that for foreign investors, there’s no US withholding tax on the percentage of earnings generated outside the US.

    Great news as it makes PM quite a bit more attractive for me πŸ™‚

  58. I’m in Longmont, Colorado. About 20 minutes NE of Boulder and still in Boulder county. It’s about the same population as Boulder, but the vibe is much different. It’s more spread out, no college population, no climbing gyms, median home price is half of boulder ($460k vs about $230-250k vs mine 206k). Interesting dichotomy. Still – very Bouldery. There’s a greenway (bike highway) running through town, multiple craft breweries, bike lanes on major streets, we’re installing our own municipal gigabit internet (before Boulder!).

    Stop by for a night at Fort Frugal. Mr. Money Mustache is about 8 blocks over, too. Still haven’t met him.

    Cheers!

  59. hey E Man

    I have used averaging down as well, i personally think this can work with quality companies that fall more than 10-20% percent, but anyway i dont wait that much either. I’ve used it with starbucks where i got in at the top ( ~80 usd back in october 2013 ) than when the correction came i bought twice at ~70, worked well . Another that happened recently BASF came down from 86 euros … i’ve bought at 78 than 73 ….. still went down to 68 when the news came that the board members were been buying shares in big volume …. so i bought at 68 as well, now i have an average of ~72 ( share price around ~73 eu now ).

    Nice to see that people have the same thaughts like me πŸ™‚

    Regards

  60. Jason,
    I was a bit more active than you last month. I sold ARCP and SDRL for reasons that have been well discussed by now. If you own either and decided to keep them, I understand, but I wanted a little less drama in my life. Hey, in 4 months I’m going to be retired. YAY!

    I had a significant amount of cash sitting on the sidelines, so I made several purchases. I took advantage of the drop in energy stocks to increase positions in CVX and XOM. Plus, I added to positions in GOOGL, HSY, WFC, V and MAT and started positions in BBL, GILD, and IBM. A very busy month, indeed. Even surprised me when I added it all up. But hey, you have to put that money to work, right?

    Started out December by starting a position in COP before the price started to go up. In at $66 even. Now if we could only get a pull-back in consumer staples and healthcare.

    Congrats on the progress, both financial and in your personal life. πŸ˜‰
    KeithX

  61. Dividend Mantra,

    That is a nice monthly increase in the portfolio of that size and diversity. Even better is locking in that dividend income indefinetly. Congrats thhe freedom you have now was achieved in a few short years even before your target dates probably. Be interesting to see when we get a correction.

  62. Dividend Mantra,

    Congrats on the increase in portfolio. You keep chugging a long. Before you know it, you will log into your brokerage account one of these days and see a huge increase that you will be dancing around in your living room. Maybe the same thing if a huge correction that you can buy stocks on sale. That is my favorite type of sale.

  63. KeithX,

    Can’t blame you at all for selling SDRL and ARCP. A lot of drama there. I’m thinking of selling ARCP myself, if just for a tax-loss play. It’d be such a shame, though, because the properties are really solid.

    Man, you’re making sure your retirement is going to go off without a hitch there with putting all that capital to work. Nice!!! That’s a lot of action there, that’s for sure. But that surely added a good chunk of future dividend income for you. Enjoy it!

    Thanks for all the support. I’m rooting for the next four months to go fast for you. πŸ™‚

    Best wishes.

  64. SWAN,

    Thanks. Appreciate the support and kind words. πŸ™‚

    I’m definitely moving along here. I’m pretty much right on target as far as dividend income goes. I hadn’t really set up any markers for portfolio value along the way, as I knew it would be pretty impossible to predict. But I surely didn’t anticipate being at near $200k before the end of 2014. I would have predicted a lower portfolio value at a higher yield, but I’ve stretched for a couple of low-yield plays along the way.

    I hope all is well with you over there!

    Take care.

  65. IP,

    Oh, I wouldn’t mind busting a move if the market dropped by 10% across the board. Can’t promise it would be anything anyone would want to see, but that’s the benefit of working from home all alone. πŸ™‚

    Congrats on passing up $75k yourself. Things are moving along nicely for you over there. Keep it up!

    Cheers.

  66. Agreed! You’re getting there. I’m jealous but I started much later than you. I just got into the energy field today with some BP purchases.

    Curious though – what are your thoughts on telecom? Infrastructure heavy such as AT&T shouldn’t trade so cheap (AT&T is already my largest non-fund holding)

  67. Jay,

    We all wish we would have started earlier. Trust me, I wish I would have started when I was 21. I can almost guarantee you I’d be FI by now. But I’ve learned a lot along the way, and I regret nothing. πŸ™‚

    I don’t value companies based on infrastructure, but capital-intensive businesses (and infrastructure-heavy) generally do trade at a discount because of the high fixed-costs. Those costs are a drain on possible returns. I would value T (or any other telecom) just like any other business – discounting all future dividend income back to today. Under that method, T isn’t really a steal here. And that’s because the dividend growth is so low, barely keeping up with inflation right now. In fact, if they continue with the $0.01 per quarter dividend raises then the dividend growth will be trailing inflation. Generally speaking, the yield and long-term dividend growth is an approximate proxy for long-term total return, assuming a static valuation. So you’re looking at ~8% total returns here with T. Not bad, but below my hurdle rate of 10%. That said, one can also account for the time value of money, and use a lower discount rate for stocks with higher yield. You know you’re getting more cash now, so there’s a bird-in-the-hand effect going on there.

    Cheers!

  68. PIM,

    The chart is coming along nicely, though I also wish it would take a pause and allow me some really cheap stocks. There’s still some value out there, so that’s where I’m concentrating. πŸ™‚

    Appreciate the support very much. Hope all is well with your journey!

    Best wishes.

  69. Congratulations Jason.

    It’s nice to see your portfolio balance inching closer to that 200k mark. I know it’s just a number and not much different from 199k, but getting to a new “digit” in the 2’s is so exciting. I know it’s psychological and one should concentrate on dividend income, but I know I can’t wait for my portfolio to break 120k! I’m a couple of k’s away.

    Speaking of dividend income, December looks real exciting, as I expect over$600 in dividend income! It started with COP dropping off their dividend in my computershare account yesterday. Can’t wait for your post when you finally eclipse the 200k mark.

  70. DM,

    Awesome! $200K soon? Though we both know we’d rather take a nice 10-15% hit to our stock prices – seeing the MV of the portfolio gives you a little smirk and head nod, right?

    I remember when I crossed the 100K mark mid-year and now I’m over 131K… I want to say I am close to doubling since 12/31 of last year – it is insane! Have you established goals for 2015 yet?

    -Lanny

  71. jm,

    I’m with you. The concentration is of course on the dividend income, but I won’t deny that breaking through another $100k will be awfully exciting. Congratulations to you as well – $120k is fantastic. πŸ™‚

    I think December will be a great month for many of us. Over $600 is some serious income there. That could cover my rent and then some. Keep it up!!

    Thanks for the support.

    Best regards.

  72. Lanny,

    Right. I feel the same way. Taking a hit to the portfolio value is short-term pain for long-term gain. I’d be more than happy with that, knowing my current capital could work harder in cheaper stocks.

    You’ve had some great progress over there. Consistent saving and investing has a great effect on one’s wealth, and you’re putting that to the test! πŸ™‚

    I have some ideas in mind for 2015, most specifically for dividend income. We’ll see how 2014 finishes, and then I’ll have an excellent gauge to see where I want to be next year. But so far, I’m right on target.

    Thanks for dropping by!

    Best regards.

  73. You had a great year! It’s really nice that your freedom fund keeps growing even after you left your day job. It’s a great feeling. Yeah, I don’t mind a pull back either. I’m a bit low on cash now, though. I picked up some RDS.B and GE recently. I’ll check out NOV. I’ll have to save up a bit before I can buy more.

  74. Jason,

    I love that you’re posting so much content lately, I feel like a kid in a candy store whenever I see a new article. You wrote some very inspiring posts over thanksgiving and congrats on the recent purchases and sale. It’s great to see the freedom fund taking on a life of its own, but I still hope to see your income and contributions consistently rising from all the writing gigs. I remember you thinking that working for yourself was going to be a trial period, and now look at you contributing more than so many of us! Thanks for always setting an amazing example and I can’t wait to read about your November dividends!

    Best,
    Ryan

  75. T should be cheap(er) than less capital-intensive industries (retail, consumer goods, etc). According to this article, though slightly outdated, the 2012 “maintenance” Capex estimate for T was ~$8B.

    http://www.fool.com/investing/general/2012/11/08/att-goes-for-broke-who-wins.aspx

    The 2012 10k shows total Capex of $19B, so ballpark $11B of “growth” capex. Keep in mind, since the late 2000s, both T and VZ have been pouring billions into building out LTE. I don’t have a firm estimate, but I am betting that total capex will fall more than “maintenance capex” rises, leading to increased cash flow generation.

    There simply isn’t that much real estate in the USA which needs more cell towers. Of course, over time populations grow and cities develop, but that takes time.

    This is my long way of saying I expect T (and even VZ by extension) to pay out solidly over the next few decades. Neither is without risk, as it’s not too far a stretch to think that internet service could be provided economically from satellites in 10+ years??? Also, it’s possible the govt. could start packaging and selling much more airwave licenses in the future, thereby increasing supply and making all the money they paid recently a poor investment. Then, there’s competition from VZ and to a lesser extent, Tmobile and Sprint.

    A solid holding, considering you’ll get half your investment back through dividends in roughly a decade, plus the growth you get from reinvesting elsewhere. With the cash flow growth in the 5-10 yr span (roughly 2019-2024), I expect multiple expansion as well.

    I wouldn’t go crazy buying telecom here, but I wouldn’t ignore it either. It does deserve a discount, hence why it regularly yields 5%+.

  76. Joe,

    Thanks, man. I’m really proud of the success I’ve had in 2014. I honestly have no complaints at all. It’s been an amazing year and I’ve learned a lot along the way. Certainly, I’m in a much better position at the end of the year then I was at the beginning. And that’s what it’s all about. πŸ™‚

    You’ve had a great year as well. 2014 has been really special for some of us. Glad as well to be a fellow shareholder with you in Shell and GE!

    Thanks for stopping by.

    Best regards.

  77. Ryan,

    Thanks so much. I’m glad you appreciate the content. November was actually a record for output, as I published a total of 38 articles throughout the month. And I feel really good about the quality, because I’d never want to sacrifice quality for quantity.

    The self-employment is obviously going very well. Much better than I had expected, to be honest. Who’s to say how long it will continue, but I’m a happy camper right now. I just know in my heart that if I work hard, stay optimistic, and give something my all, good things can and do happen. πŸ™‚

    You’re doing great over there as well. It seems many of us are having a fantastic year. I’m sure 2015 is going to be even better!

    Cheers.

  78. Jason,

    Congrats on the increase this month and the excellent purchases of BHP and Unilever! Giving up your day job and seeing a $40,000 increase is nothing less than killing it.

    I also have to agree with Ryan that it’s fun to have you posting more than a couple of months before. Always happy to read your stuff.

    Keep it up,
    NMW

  79. That’s incredible how quickly the value has grown! I can see you hitting your $1M goal way before you have intended (As long as the markets keep gifting nicely).

    Congrats, can’t wait to see the big $200k,
    Steve

  80. Very nice set of numbers you have going there. Good job. The dividends should be rolling in quite nicely toward the end of the year.

    Keep cranking,

    Robert the DividendDreamer

  81. Nice to see the Freedom Fund continues to hum along for you, DM. I was just comparing mine to yours. I am currently invested in 28 companies (plus two mutual funds and one ETF), and we have 12 common companies that we are “co-owners” of! My portfolio value is currently just under $60,000. Pretty amazing if you ask me. When 2014 started I was invested in 4 individual stocks and 5 mutual funds, and the portfolio value was hovering around $40,000! Lots of socking capital away, lots of dividends being paid, and a bull market has made for a fun year for me to transform my portfolio to a dividend investing strategy. Thanks for the continued updates, and motivation!

  82. Jason,

    I have been following your blog for quite some time and that is the 1st time I leave a comment. You are truly inspiring. Keep up the good work.

    We started investing around the same time so I have used your updates as a proxy. I am secretly racing with you πŸ˜‰

    I am 30 years old and my freedom fund currently sits at $180 545.54.

    Granted, I have an above average income but I am not as frugal as you are.

    Wanted you to know that you motivate me to do better and save more every time I see your updates and realize that you are always a few steps ahead.

    See you at the finish line.

    Thanks brother.

    HD

  83. Jason
    I am looking forward to the graph staying level or declining- permitting you to purchase more shares for less capital. Why are your readers so obsessed with the rising portfolio value when they know that the only important measure is dividend income?

  84. NMW,

    I’m incredibly fortunate. I didn’t expect to be able to continue buying stocks so routinely after quitting my job in the auto industry, but I’m grateful for it. πŸ™‚

    The amount of content I’m putting out these days is way higher than ever before across all platforms I contribute to, while I’m also striving to keep the quality high. It’s the community that makes it all worth it to me!

    Thanks for the support.

    Best regards.

  85. Steve,

    I actually don’t have a goal to hit $1 million per se, but I assume it will come at some point or another. That’s a long way off, but it’s also be exciting when it eventually does happen. For now, I’m just concentrating on building up the dividend income by buying the highest-quality dividend growth stocks at the best values possible. πŸ™‚

    Thanks for dropping by. I hope you had a fantastic November!

    Take care.

  86. BCS,

    Congratulations over there on your success over the course of 2014. Sounds like it’s been a great year for many of us. Keep saving and putting that excess capital to work. Your future self will surely thank the you of today for it! πŸ™‚

    Financial independence is awaiting us.

    Best regards.

  87. HD,

    I wouldn’t say I’m a few steps ahead at all. You’re two years younger than me, so I’d say you’re the one ahead! πŸ™‚

    Appreciate the support and kind words very much. I’m doing all I can to inspire others out there to pursue financial independence, proving that it’s possible to reach FI at a relatively young age without a superhuman income or some type of advantage that others lack.

    I’m so glad to hear that the message is out there and it’s motivating you to keep going. That’s why I do what I do. And I suspect that you’ll be lapping me at some point here in our “race”. πŸ™‚

    Keep it up!

    Cheers.

  88. scott,

    That’s a good question. I think it’s human nature to want to see one’s wealth grow, even if it’s really to one’s own detriment. Net asset accumulators, especially aggressive ones, would be better off with cheap stocks.

    As a side note, I’ve received comments in the past that noted that I wouldn’t have been so successful if the market didn’t relentlessly rise over the last few years. You and I both know that’s incorrect, as a flat market would have provided my capital a huge boost by being able to purchase cheaper stocks with higher yields. Hence, my dividend income would be way higher and I’d be way closer to my goal. But people don’t see it like that.

    Thanks for dropping by!

    Take care.

  89. DM,

    Great progress this month DM. I can’t believe you had so many purcases this month, I guess I lost track of them all during the craziness of the final couple of weeks. I know it is difficult to see a stock you just purchased decrease by such a large amount. I have had nothing but bad experiences trying to time the market. In my opinion, it is unnecessary gambling that causes nothing but stress. Sure, you may catch an extra percent or two in the short term. However, the long term impact of the timing is immaterial. Since you invested in a fundamentally sound company that is set to succeed in the long term, there isn’t anything to worry about. 10 years from now you will be bragging about your entry price!

    Again, phenomenal progress this month. Keep up the great work. Let’s finish out the year strong!

    Bert

  90. Hey DM-

    Have you ever considered Mead Johnson (MJN) – they manufacture Enfamil formula milk products for babies?

  91. Bert,

    It was indeed a busy month. I’m happy to have them and wish they could all be so active. Alas, my income is somewhat limited. πŸ™‚

    I’m definitely planning on finishing the year out strong. December should be a bonanza for dividend income, which will be promptly reinvested. I think we’ll all be off to a great start for 2015.

    Thanks for dropping by.

    Best wishes.

  92. Denver,

    Actually, I’ve never taken a look at MJN. They’ve done well, however, from what I can see. I have to be a little careful of how many stocks I invest in with a yield that low, so I’m not sure I have room for the company. The only thing that would concern me is how reliant they are on a single product line (infant formula). Seems to be doing well with that, however.

    Best regards.

  93. Mark,

    Thanks for the support! Much appreciated. πŸ™‚

    I’ll be posting November’s dividend income later today. It was a very solid month, all in all. Hard to be disappointed with passive income.

    Best wishes.

  94. Did you mention how much dividend income you earned for November? I couldn’t seem to find it anywhere. I love to see dividends rolling in for everyone. I had a huge December for my few month old portfolio, $26.33. That’s pretty big considering I only have small $1,000 worth of shares per stock across 11 stocks. Go snowball, go!

  95. Ken,

    Of course. I always report dividend income for every month:

    https://www.dividendmantra.com/2014/12/dividend-income-update-november-2014/

    Great job there with the dividend income thus far – that’s a lot of income for a portfolio only valued at $1,000. Awesome! I had humble beginning as well, just like everyone else. When this blog first went live back in early 2011, I was earning about the same. It rolls along, however.

    Be careful with not chasing yield, though. I had a much larger portfolio before I was hitting that kind of income.

    Keep it up!

    Take care.

  96. It was roughly $1,000 per stock and 11 stocks, so a little under $11,000 total πŸ˜‰ I think some positions are $1,500 and some are $500, but they all even out. BP or BBL is my highest yielding position right now. I’m still kicking myself for not backing it up on a few of the major dips before things took off recently.

    Man, $350 in dividend income for a single month is wonderful. It’s just so great when the money is rolling in every month and you don’t have to do anything special, I just love it.

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