Freedom Fund Update – February 2015

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’m extremely fortunate that I’m able to post these updates every single month, which shows the power of monthly contributions to investments because of the high savings rate I maintain. It shows how a relatively large sum of money can be built through the power of time, patience and perseverance.

It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.

We’re now a full month into 2015 and we’re off to an excellent start here. The S&P 500 index is already down more than 3% YTD, which is fantastic for those of us (most of you reading) that are actively accumulating assets. Cheaper stocks generally means lower valuations, which in turn means higher yields on those same stocks. Not only is the broader market down for the year thus far, but it’s been quite volatile along the way, with the energy sector’s problems seemingly reverberating across the economy. Fine by me, as I simply view short-term volatility as nothing more than a long-term opportunity.

I was just a little busier this month than I originally planned on. I started the activity off early on, with the addition to a burgeoning position in National Oilwell Varco, Inc. (NOV). This stock continues to sell off, so I may use that as an opportunity to average down one more time. I remain leery about adding too much to energy right now due to the fact that I already have too much exposure to that sector, as well as my belief that opportunities will continue to present themselves throughout the year.

It didn’t end there, though. My goal of $7,200 in dividend income this year isn’t going to complete itself, so I continue to keep the pedal to the metal. After a surprisingly impressive fourth quarter report, I added to my investment in AT&T Inc. (T) for the first time in more than three years. The yield near 6%, strength in wireless, intelligent acquisitions, and improving free cash flowΒ were too much for me to pass up, so I didn’t.

I’m pleased with these moves. I believe NOV is substantially undervalued here and the company sports some of the best fundamentals in the oil & gas space. T is roughly fairly valued, but I’m honestly surprised that the stock isn’t priced higher here. I’ve noticed that investors have been hungry for yield over the last few years in an otherwise low-rate environment, which has pushed many REITs and utilities to all-time highs. Meanwhile, T’s been barely touched. I’m very happy with that, as I was able to snag a yield near where it was a few years ago.

The current market value of the Freedom Fund stands at $181,728.90, which is a 0.8% decrease since last month’s published value of $183,298.78.Β The portfolio could have actually done much worse, factoring in my higher exposure to energy. However, I was surprised to see that it declined by such a low percentage. Even factoring out my recent deposits, the portfolio decreased by a little more than 2%.

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I’m excited. The relentless march upward has paused over the last few months, which means it could be a great time to add capital to select stocks. I can only hope the broader market falls by another 3% this next month, bringing down a large number of stocks with it. In the meanwhile, I’ll continue to allocate my limited capital to the best opportunities I can find, while keeping overall portfolio construction in mind.

I was a little more trigger happy than I should have been in January. My cash position remains low, which isn’t ordinarily worrisome for me. However, it’s a potential issue right now only because I view the odds of owing a substantial amount of money for my taxes this year as quite high due to the fact that I made a mistake by underpaying quarterly estimated taxes in 2014. That won’t happen again, as I was fairly aggressive with setting up the payments this year. I’ll continue to reassess this moving forward, but if my estimate is low, I’ll view that as a wonderful problem to have because that means myΒ incomeΒ is higher than I anticipated. At any rate, the amount of capital I’ll have to allocate toward stocks over the next few months is likely to be lower than usual.

The Fund now has positions in 51 companies. This is unchanged since last month. Both transactions in January involved stocks that were already in the portfolio.

These updates are mainly designed to show the increase or decrease in the value of the underlying equities I’m invested in, but the main purpose of investing in dividend growth stocks is for the rising stream of dividends over time. Thus,Β I don’t put too much emphasis on these monthly updates. I think it is a good idea, however, to keep track of the rising (or falling) value of one’s securities and be aware of where they are in terms of the marketplace and whether or not certain stocks are attractively priced. It find it a helpful exerciseΒ to update the values monthly. It gives me fresh perspective on which equities are performing well and which aren’t, and from there I can make educated decisions (based on further due diligence) on which stocks I’d like to add fresh capital to (while considering portfolio weight as well).

Full Disclosure: Long NOV and T.

How did your portfolio perform in January? Did you add as much capital as you wanted? Where are you seeing opportunities?Β 

Thanks for reading.

Photo Credit: BimXD/FreeDigitalPhotos.net

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122 Comments

  1. I was thinking here in Western New York, that T really stands out as a dividend investment right now. Regards to Paco.

  2. Jason,

    Your graph is somewhat helpful but I think for someone who plans to sell approximately “never”, a better graph would show estimated quarterly distributions (which are far less subject to volatility that is irrelevant to your progress). Nearly 200k is a pretty good number. I went FIRE on 5OCT2012 with 273k in my taxable account. I got into some high yield stuff before the entire market got yield hungry and felt 15% was a safe withdrawal rate (I only needed about 12% and have continued to grow my stash since then with options writing that has averaged about 22% annualized so far. My approach is more focused on current yield than growth than yours because I intend to supplement with options income along the way. But as I progress, I roll down out of high yield/low growth into low yield/high growth as fast as my net distributions can take the hit. It’s all about getting increasingly defensive from here on out.

    Just curious, what Safe Withdrawal Rate are you targeting (I’m down WR of a little under 10%)?

    I’m also curious if you make any room at all for companies with no yield? I’m a big fan of the potential in insurance companies that have a history of profitable underwriting. There are a lot of “mini-BRKs” out there. I have lots in my IRA because I want growth there more than I want immediate income to meet bills. And I have one TPRE in my taxable account. It is a small position because of the high opportunity cost of deploying cash somewhere there is zero yield.

    One more thing: bonds? I like munis in my taxable account. NIO is yielding almost 6% tax free. Growth will be well nigh nonexistant but it is a very defensive choice.

    Anyway, I have to go meet dad for lunch. Gratz on the monthly progress. You WILL get there!

  3. I’ve been watching NOV and BBL very intently. I almost purchased BBL a week ago when it dropped below 40 and NOV has been very appealing when it was down around 52 early last week. CAT and CVX are on my short-list of stocks I’m watching. I’m in no hurry, but if the market as a whole would make a correction then I can see my first stock purchase in a couple of years happening.

  4. Nice work DM. You got two great purchases this month. Telecom is a sector that I am looking to initiate positions in since I don’t have any exposure. T and/or VZ are couple of stocks that I am looking at more closely to start adding as part of my weekly purchases. Like you mentioned, T’s stock hasn’t made any significant moves in the last few months. So planning to start weekly purchases soon and build the position over the next few months.
    I am still debating on add to my oil/energy stocks. I added to my COP position in November and December and also been adding to BBL since December. Looking forward to adding a bit more to my oil stocks as I am thinking that the oil price will start rebounding from the 2nd half of this year.

  5. Your reaction to falling stock prices reminds me of this great Warren Buffett quote from 2001: β€œTo refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the β€˜Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying β€” except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.”

  6. Hey Jason,
    That is a nice trend you got going, at this rate 2015 will be your year to break the $200k mark. I’ll be looking forward to see how far you can push that passive income. $7200 is a decent amount dividend income and its great to see this snowball propelling it self. Most people these days can’t even save and extra $7200 a year let alone make it passively. Keep that freedom fund looking thick solid juicy and tight haha!

    Cheers

    Ace

  7. Jason,

    Great to see your portfolio remain relatively stable even though US markets have gone down recently. Too bad I won’t be able to capitalise on the downturn over there because the US Dollar has strengthened so much over the past few months. Every downside has an upside though because that also means that my US dividend yield is now higher.

    On top of the stronger US Dollar, European stocks have soared over the last couple of days after the ECB officially announced QE for the Euro area. As such, my portfolio is up by about 9% YTD already.

    Keep it up, looking forward to you breaching the $200,000 mark.

    Best wishes,
    NMW

  8. DM,

    Nice post and it’s funny to see so much capital go in, yet the downslide to the overall portfolio, but do we really care? Nah, it’s been an extreme buying opportunity this month for us, and it’s hard to take a deep breath and to take our time with investments, as we are trained in our minds to buy quality companies if we feel they are at discounts. I wonder what February will bring as you inch closer to freedom from dividend income alone. Great month though of purchases Mantra, not even sweating the a few grand decline to the portfolio, as I had a similar downtrend this month as well (Think I took a 2-3K hit on Friday alone haha).

    Thanks for sharing DM and, though it doesn’t matter, it’ll be nice seeing your portfolio at $200K soon.

    -Lanny

  9. Keep up the great work Mr. Mantra.
    ” the only thing that gives me pleasure is receiving my dividend checks”. Love it.
    I’m gonna pick up some ATT soon bud. I’ve been obsessed with the good deals in oil.
    Much love my friend. Tyler.

  10. DM,
    Wow,you’re just one or two rallies away from $200,000. That will be quite an achievement. I know that isn’t your primary concern, but a ‘2’ handle will feel great. Keep up the progress!
    -RBD

  11. Jason,

    Congrats on the portfolio remaining just about completely consistent in a pretty volition time, especially in the energy sector.

    Could you perhaps highlight at some point your stance on liquidity and what you keep liquid at any given time?

    Cheers to February.

    Howie

  12. I like the T purchase. I have been and will be a holder of T. The yield is a big draw for me. I have been adding to the position all month. Nice total you have there. Mine drops a lot when it does drop because of the concentration in certain areas, but when it goes up, it goes up a lot. However, the income is the real goal, so gotta keep adding to the positions.

    Keep cranking,

    Robert the DividendDreamer

  13. Great to see your well-diversified portfolio hanging in there so strongly, and some nice recent additions too. I certainly wish I had more capital to invest right now! Hopefully it’s a blessing in disguise though, and further opportunities present themselves during the year when I have a few extra dollars to invest – and I’m sure you’ll be continuing to do the same with that fantastic savings rate you’re maintaining!

    Cheers,

    Jason

  14. Jason – I know I’m pretty excited to see the flat-lining in the markets. I’ve got quite a few stocks on my watchlist and frankly not enough capital for all the ones I want! I’ll hopefully make 2-3 purchases this coming money on top of my regular Loyal3 contributions. We shall see what happens.

  15. Thanks for sharing your recent freedom fund update. Gotta watch those tax burdens. I know it can be tough to estimate and who wants to overpay and wait for the refund but being self-employed can sometimes be a tax challenge as income can fluctuate greatly from month to month or from early in the year to later. Still great progress with your dividend income which is the primary reason we are all here and not necessarily for the growth in our portfolio values. Superbowl Sunday! See ya!

  16. marian,

    T looks pretty solid here. Fair valuation, high yield, the business is easy to understand, the service is ubiquitous, and they’re growing (albeit slowly). We’ll see how it goes! πŸ™‚

    Take care.

  17. Dividend Mantra,

    Like you said it is mainly about the dividend income and dividend increases over time. I, personally, managed a slight increase this month which I was surprised. Energy is a large part of my portfolio and the holdings are large in terms of weighting.
    Looking forward to this month to take advantage of some market pessimism. Who doesn’t love a sale when you are accumulating assets.

  18. keith,

    I would caution against a SWR anywhere near that high. The commonly accepted SWR, based on substantial research, is 4%. And even that isn’t guaranteed. I would never recommend anyone try to claim financial independence with a SWR of 10% or 15%. That’s incredibly risky.

    I’m not actually targeting any SWR at all. I plan to live solely off of the dividend income my portfolio generates, meaning I won’t sell any stocks. That said, my portfolio is yielding somewhere around 3.5% right now. So you could call that my withdrawal rate, except I won’t be selling any assets.

    You can read more about that here:

    https://www.dividendmantra.com/2014/09/the-4-rule-examined/

    I’m not particularly interested in bonds right now. I don’t think the risk/reward is attractive enough here. Stocks historically return far more than bonds over the long haul, and the odds seem even higher right now that that will persist:

    https://www.dividendmantra.com/2014/07/a-0-allocation-to-fixed-income/

    Stocks that offer no yield aren’t for me for a variety of reasons. There are plenty of great companies out there whose common stock pays no dividends. But there are more than enough high-quality companies that do pay substantial dividends. I see no reason to look past the more than 600 US-listed CCC stocks to start focusing on stocks that don’t serve a purpose for me. That said, there are a number of great insurance companies that pay growing dividends. AFL, TRV, CB, and HCC are just a few off the top of my head. I hope to expand my insurance holdings at some point here. I wrote about a few of them last fall and missed my opportunity there. That was a mistake on my part. Should have bought TRV at that time.

    Thanks for dropping by!

    Best regards.

  19. Stoic,

    Wow! Might be purchasing some stocks? Nice. πŸ™‚

    We’ll see what we get. I think there is some value here and there, but would certainly love the market to drop and take most stocks with it. I’m never opposed to more and/or better opportunities.

    Thanks for stopping by. Hope you’re having a great weekend!

    Best wishes.

  20. DGJ,

    I think we’re fortunate that T hasn’t really moved much over the last few years. I’m surprised about it considering all the yield chasing that’s going on, as it seems like low-hanging fruit here.

    Happy shopping over there. Certainly some opportunities here and there. πŸ™‚

    Cheers!

  21. Jim,

    Ha. One of my favorite quotes there. πŸ™‚

    I’ve never understood the mentality with stocks, where people want them to be more expensive. Unless you’re absolutely done accumulating assets for the rest of your life, that’s a poor way to think about stocks. Even then, it’s more beneficial to your wealth if prices stay low so that buybacks are more effective.

    Such is life. But I’m doing my best to spread the word.

    Thanks for stopping by!

    Best regards.

  22. Ace,

    I’m really excited about 2015. I think it’s an incredible opportunity here to really turn the corner. Many of us in the community have been at this for a few years now, and you can start to see the numbers pile up and compounding start to take off. It’s incredible. πŸ™‚

    Thanks for dropping by. Keep up the great work over there as well. Let’s see where we land in 12 months!

    Cheers.

  23. NMW,

    Absolutely. That’s kind of what I was saying over on your blog a little while back. Currency effects go both ways and they tend to even out over the long haul anyway.

    Yikes! That’s unfortunate that QE affected stocks over there like that. The same basically happened over here over the course of a few years there. I think we’d obviously prefer a 9% change the other way. More expensive stocks are definitely a headwind for us. But nothing we can’t overcome. πŸ™‚

    Keep up the great work over there! You’re making excellent progress.

    Best wishes.

  24. Lanny,

    Right. The bigger our portfolios get, the more they’ll be affected by market swings (and less by new capital infusions). If the market drops by 10% from here and my portfolio reacts similarly, that’s would affect the balance by almost as much as an entire year’s worth of fresh capital. Of course, I’d love to see it!

    Let’s hope the volatility continues for a while. πŸ™‚

    Thanks for the support.

    Best regards!

  25. DH,

    Rockefeller. The original dividend growth investor! πŸ™‚

    I hear you there on the excitement regarding energy. Some of the supermajors are starting to get interesting, like XOM. The services stocks (like NOV) are really screaming at me here, but I have to manage risk there. So we’ll see what happens here. Hoping for more volatility/downside.

    Thanks for all the support. Keep it up over there.

    Best wishes.

  26. RBD,

    Definitely. I admit it’ll feel good to see the second hundred grand tick over, as it just shows the power of consistency and persistence more than anything else. It wasn’t that long ago that $200k was “lottery money” to me. I thought it would be impossible for me to have that kind of wealth outside of landing a winning ticket. I plan to write a post about that mindset at some point soon here.

    I’m really hoping that it takes another year or two to hit $200k due to weak market conditions, but I suspect I’ll probably end up hitting it before the end of the year. I’ve gotta think of a way to celebrate. Might just be a pizza or something. πŸ™‚

    Thanks for all the support. Let’s keep it up!

    Cheers.

  27. fitnpoor,

    Thank you so much. I’m doing my best to highlight this journey from almost the beginning. I’m also trying to show that it doesn’t require a lot of time, a big income, or some kind of specialized knowledge. Anyone can do it. And I hope that in itself is inspiring. πŸ™‚

    Take care!

  28. Howie,

    Thanks. I’m slighly surprised my portfolio didn’t drop much more than this only due to my energy exposure. Then again, I find my portfolio generally oscillates less than the broader market, especially on the downside.

    I generally try to keep around $5k or so in cash around. I’ve discussed my stance on liquid cash a few times:

    https://www.dividendmantra.com/2011/10/my-thoughts-on-emergency-fund/

    https://www.dividendmantra.com/2014/11/cash-flow-is-cash-but-better/

    Those are just a couple of articles I can think off the top of my head, but I’ve been open and consistent about that since the beginning.

    Hope that helps! πŸ™‚

    Cheers.

  29. Robert,

    I hear you there on T. It’s a solid business, but the yield is the big draw there. As long as the dividend is sustainable, I’ll be a shareholder. The FCF is a bit worrisome, but the guidance and acquisitions makes me feel a lot more comfortable.

    That’s interesting how your portfolio works like that, but yours is obviously constructed very differently. Nothing wrong with that at all. A more exhilarating experience. πŸ™‚

    Keep up the great work over there!

    Take care.

  30. Great additions to the Freedom Fund Jason. We own both NOV and T in our family’s dividend stock portfolio as well. Great minds?! πŸ™‚ As for a decreasing portfolio value, I think that could probably be said for many investors lately, especially those whom are exposed to the oil and energy sector. As a long dividends keep pouring in, I’m not too worried about portfolio value or the individual stock prices. If anything, I see it as an opportunity to buy more at better prices! πŸ™‚

    Enjoy the rest of the day and the BIG game if you’re watching. AFFJ

  31. Jason,

    Thanks so much. Appreciate the support!

    Your capital situation could very well be a blessing in disguise. I hope it works out for the best and better opportunities come along down the line when you have more cash around. πŸ™‚

    Should be a great year. Let’s continue to take advantage of it.

    Cheers.

  32. W2R,

    Sounds exciting, my friend. I love having a healthy watch list around, though I also just about always find myself with more stock ideas than capital.

    Getting in 2-3 purchases plus some regular smaller buys sounds fantastic. Keep at it!!

    Best regards.

  33. DivHut,

    Yeah, estimated taxes is a burden. I wish the system were better, but it is what it is. πŸ™‚

    Appreciate all the support. Enjoy the game!!

    Best wishes.

  34. IP,

    Wow. Nice. A large exposure to energy has been a headwind lately in terms of total return, but that’s a massive opportunity for long-term investors. I’ve been happy to pick a few quality stocks up due to that, but I hope it gets a lot worse. πŸ™‚

    I’m with you all the way. I don’t know why anyone would pass up a good sale on great stocks. It’s unlikely energy will let up anytime soon, and that could continue to cause volatility across the broader market. We can only hope!

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

    Best wishes!

  35. Stoic,

    Those are all on my short list as well. EMR as well. I shouldn’t be timing the market, but seems like oil is still dropping so haven’t pulled the trigger on either BBL or NOV myself…

  36. Hopefully you’ve got your tax liability estimated. You’ve still got 10 weeks before you have to lay the money down. It’s not hard to understand jumping at some good values. I suppose you can always judiciously sell from some of your most overvalued holdings if necessary….

  37. AFFJ,

    Glad to be a fellow shareholder in T and NOV! πŸ™‚

    Appreciate all the support. We’re definitely on the same page in regards to cheaper stocks meaning opportunities. The energy sector has definitely opened up a bit, with a number of high-quality stocks down 30% to 40% over just the last few months. I’m trying to temper my enthusiasm a bit, but I’m also not going to pass up obvious value if the capital and room in the portfolio is there.

    I’ll definitely be watching. We’re going to splurge a bit on wings tonight. We don’t eat wings too often because they’re fairly expensive, but we’re blowing the budget today. πŸ™‚

    Enjoy the game if you’re watching. Should be great!

    Best regards.

  38. Chris,

    I have a generally decent idea of what I may owe from the self-employment income. Still waiting on the W-2 to see where I stand from the income I made from the dealership. Looks like it’s going to be a fairly large bill, but you’re right in that I still have time to collect the cash. Of course, I also have to come up with the $3,750 for this quarter’s estimated taxes on top of that.

    Selling stocks would be a last resort. I honestly don’t think it’ll come to that unless I substantially underestimated my liability. We’ll see how it goes. πŸ™‚

    Cheers!

  39. Jason, I like the graph going up slowly and steadily πŸ™‚

    I’d a small increase in my portfolio this January that I’ll be posting as well. I know total does not mean much, but it gives some satisfaction that progress is being made and that gives some motivation.

    Best,
    PIM

  40. Gotta love a down market when accumulating assets! You picked up a couple good companies so reaching your dividend goal for this year comes one step closer. Perhaps we will get a bigger pullback and our money will be able to buy more stock in quality companies. I’m really looking forward to seeing your next post… Dividend Income!

  41. I think you could potentially paying $0 in taxes this year as dividend and online income might not surpass the $36000. That’s why I’m looking forward to the day I hand in my retirement note. No more earned income taxes.

  42. Pretty good month, but I’ve had some stocks really take off in the last few months to help counter some of the falls in energy. Most of my contributions each month go into my 401k and Roth, so it’s generally a smaller amount heading into my brokerage accounts. Just passed 160k myself in total investments. Looking forward and hoping for 200k by the end of the year, although like you I’d be happy with a flat market or even a 10% decline if it helped to open up some more values.

    Generally, I see equities staying a bit pricey for the foreseeable future, so long as major economies stay the course with easy money policies. Volatility will be our friend.

    Energy has been very interesting. It seems the worse things get overall, the more investors rebalance into higher quality names and keep them afloat.

    I’m already into T and NOV. I’d love to add more in the energy equipment/services sector if more value opens up. I’m eyeing SLB if it gets back into the mid/low 70s, and also the top end with RDS_B. I do think my next purchase will be in IBM. I’d love a higher yield and a more loved possibilities, but while it continues to be hated, I think now is as good a time as any to initiated. I imagine IBM will be a slimmer company in 1-2 years as it continues to rebalance its business lines, but I’m definitely looking forward to the strong payouts and growth. Change is always painful, so I don’t buy all the “IBM is dying” doom and gloom talk. We shall see.

  43. PIM,

    Thanks so much. I like the look of that graph as well. πŸ™‚

    Glad you had a great January over there. Every single month counts. The road to financial independence is just a lot of months like this past January. Keep it up!

    Best regards.

  44. ADD,

    I’m right there with you. Love a volatile stock market, so I hope that continues and then some. πŸ™‚

    Hope you had a great month on all fronts. Looking forward to seeing the reports!

    Cheers.

  45. Vivianne,

    I’ll definitely surpass $36k in online and dividend income in 2015. And the online income would still be taxed regardless. But I’d rather have a tax problem than an income problem. πŸ™‚

    I’ve never really had a huge bill. This year’s bill is my fault. I just didn’t pay enough in quarterly estimated taxes last year. Lesson learned.

    But I’m with you on looking forward to a much lower liability one day. I plan on entering financial independence with approximately $18,000 in dividend income, so I’ll have the opportunity to think about how much active income I want to earn, which will allow me to kind of tailor my tax liability. That’s a big benefit of financial independence.

    Thanks for dropping by!

    Best regards.

  46. Ravi,

    This could be a real exciting year for both of us then in terms of hitting $200k. I’d definitely rather see the market drop a bit, but I’ll also take that number and celebrate. πŸ™‚

    I think IBM is one of the clearest and best values in the entire market. Those obsessing over revenue haven’t looked at IBM’s cash flow, which is extremely robust. They could probably grow the dividend at an attractive rate for a couple more decades even without any revenue growth, so there’s a lot of potential upside there.

    Looking forward to what the rest of the year brings us!

    Best wishes.

  47. Given the recent market woes I thought my portfolio had lost a lot of money this month. After reading your post I was curious so I looked and it turns out it went up a few thousand but last week was pretty nasty. I like your recent AT&T purchase as well. I’m read that T is getting quite a lot of auto subscriptions. That could be a sector for future growth as well. Good work.

  48. Hi Jason,
    You have a great plan. I am wondering if you have taken into consideration a stock market correction that may foil and delay your retirement age? I am 60 years of age. I often laughed ( tho’ silently) when people told me that on their 65th birthday they were going to take their stock portfolio, turn it into fixed income, and retire. People would tell me this as if they knew the stock market would be alright 10, 20, or 30 years from then! Impossible.

    Have you ever considered “what if” the market has a 2008 style correction on or near your 40th birthday. And suddenly half your assets are gone, and dividends drastically cut for the next 6 to 8 years? I always took this into consideration and kept at least half of my money in solid green cash in the bank, albeit the current low interest rates the money is entirely safe. There were times in the early 80s and 90s that I was getting 6%-9% in CDs at the bank, and 13% in bond funds. So for me, if the market took a 1969 or 1987 or 2000, or 2008 collapse again, I would have enough “green” to suffice and last thru the decline.

    The market has always had ups and downs, bulls and bears, major bull markets, and major bear markets. We are currently on a 6 year major bull run with the market near all time highs. The dow was almost at 18k, but now has sunk to just over 17k; a healthy correction although mostly due to the oil price collapse. People who own “T” stock are not going to use the telephone any less because oil dropped in half, yet “T” is down 7% in the last 4 months. This example just names a few.

    So just a bit of my accumulated, maybe even sage advice for which to reflect. Any comments?
    Best,
    Dan

  49. Good stuff, DM. I know you are looking forward to a dip in the Freedom Fund so you can take advantage and buy some quality stocks for a great price but I still expect you to hit 200 and maybe 220 before the year is out.

    As PG has been hit by about 7% in the stock value due to the strong dollar I’ve been adding to my position there and will prolly have about 70 shares there by the end of the spring if it remains in the low to mid 80s.

    EMR also looks like a good buy in the mid 50s with that yield and their payout ratio is currently pretty decent. Looking at 20-30 shares there in the next few months.

  50. jerryalez,

    Yeah, the last five days were kind of rough there. Of course, us long-term investors pray for such events. πŸ™‚

    Glad your portfolio held up pretty nicely there. It’s great to have a high-quality base of assets working for you while you scoop up opportunities on the cheap.

    Thanks for dropping by!

    Take care.

  51. Dan,

    It appears to me that you’re far too focused on stock prices and the general action of the stock market. I mention that based on most of the comments you leave. It would seem we just don’t share a common mindset/perspective.

    I’m not concerned about a major broader stock market pullback. In fact, I’d welcome it. If stocks hadn’t appreciated so heavily over the last few years, I’d be further ahead in my journey. But I deal with setbacks the best I can and focus on the best deals I can find.

    You can scan my portfolio and easily see which stocks cut/eliminated their dividends during the financial crisis/Great Depression. That’s as good a test as any. If such an event were to occur again, I’d expect similar results. I’ll spare you the mystery and just tell you that two companies out of the 51 I own a piece of cut their dividends during the financial crisis. Three if you count BP, but that was related to the Deepwater Horizon incident. As you can read in the post below, I can deal with that:

    https://www.dividendmantra.com/2014/04/why-i-eventually-want-to-be-invested-in-50-companies-income-diversification/

    Best wishes.

  52. Mike,

    Thanks! πŸ™‚

    I couldn’t agree more. Would love to see the Fund drop so as to have even more opportunities across the board. We’ll see what we get!

    Solid ideas there. EMR in particular looks pretty good here. I see a few industrials that seem solid. GE and DOV are a couple of others that I wouldn’t mind buying right now. Quite a few industrials have been punished due to exposure to the energy sector. Makes sense, though it’s an opportunity to buy into well-diversified firms, especially if you think their energy operations will be fine over the long haul (I do).

    Happy shopping out there! πŸ™‚

    Best regards.

  53. Hi DM

    No fret there.

    Seems like you are enjoying the drop as I do. What matters is your dividend income gets bumped up with more purchase at a lower price. That surely cannot beat anything.

    There will be more chances this year judging by how the first month goes. The selection would be as hard during the sale as it was during the bull.

    Take care

  54. A 10%-15% withdrawal rate by all research I have encountered is way to high. Even FireCalc calculates a 0% success rate at your current withdrawal rate. Along with a 83% success rate if you were to use the 4% withdrawal rate with a portfolio size of $273K.

    None the less if it is working for you so far that is great. Congratulations on reaching FIRE I will be following along to see how it plays out!

    Good luck,

    Mr. Captain Cash

  55. DM,

    Looks like I was a little off with my previous comment expecting your freedom fund to be near $200,000. Stock market pullbacks are always welcome in my books as I thoroughly enjoy averaging down on previous purchases.

    Great job putting more capital to work throughout the month of January.

    Thanks for sharing,

    Mr. Captain Cash

  56. I received my first dividend today – $13.16 from AT&T! Everyone has to start somewhere πŸ™‚
    Thanks for making your story available to the public!

  57. I am also embracing the decline in the S&P thus far this year as a buying opportunity. I will be making some substantial investments in the month of February as it is time to max out my two IRA’s. I have my eye on two REIT’s, UHT and IRET. I will also probably average down on my position in XOM. MSFT had a rough week on disappointing earnings. This is one of my favorite stocks and largest holdings, so I may add to my position here. Overall, my total portfolio value was up .2% last month. I make the same automatic contribution to my taxable account every month, and as I said February is the month that a make my largest contribution to my IRA’s for the year.

  58. Jason,

    Well done to you.
    On our side, as you probably have seen our portfolio drop by 15% in January due the Swiss National Bank decision to stop supporting the Swiss franc. But as I said this a great opportunity for all FI seeker of around the world and especially Swiss resident to buy stock at discounted price. The market already get back around 5%, so there is still 10% of up-side, I am still confident that our exportation will remain solid and therefore companies should be able to maintain there revenues.

    It will not be an easy come back but with time, but I will retired only in 10 years. So still plenty of opportunities to grow the portfolio and therefore the dividends.

    Cheers, RA50

  59. I added several positions to my Dividend Dreams fund in January. I bought NOV, BBL, MCD, BA, VLO, WMT. MCD and WMT are small positions I used to test Loyal3 and VLO is a small position so I could test Robinhood.

  60. B,

    Absolutely. The dividend income is our ultimate barometer of success/progress, and a cheaper market creates a headwind toward that end. πŸ™‚

    So many stocks, so little capital. I imagine our difficulties with selecting stocks will only increase as more opportunities present themselves. Of course, it’s a good problem to have.

    Thanks for dropping by. Hope all is well!

    Best regards.

  61. Gremlin,

    Thanks! Yeah, ARCP didn’t rock the boat all that much, which I think just speaks to the importance of diversification. I would have rather had avoided the whole incident, but it didn’t really impact my long-term plans at all.

    Great job there with the dividend income. And I think you made a smart move with WIN. Everything is moving in the wrong direction with that company.

    Cheers!

  62. Piled,

    Nice. We all have to start somewhere and that’s as good a start as any. I think my first dividend was like $6 from WMT. Big things come from small beginnings, my friend. Stick with it! πŸ™‚

    Best wishes.

  63. MCC,

    “None the less if it is working for you so far that is great.”

    A SWR that high can work when the market doubles in five years. Won’t work over the long haul, as the market has returned much less than that over the last 100 years.

    Cheers.

  64. MCC,

    I’d much, much rather delay $200k until 2016 if it means I’m able to scoop up deals across the board. I think there’s still some value here and there, but nothing like what we had just a couple of years ago. The more opportunities, the better. πŸ™‚

    Thanks for dropping by. Hope all is well with your cash stash over there!

    Take care.

  65. BCS,

    That’s fantastic. February should be very exciting for you. I noticed that drop for MSFT as well. A 3% yield is usually a good time to snag shares. It’s on my list as well. The cash hoard is very nice and the company still has a cash cow in Windows. I like Apple’s ecosystem a lot better, but it’s unlikely MSFT is going anywhere with a strong enterprise business.

    Happy shopping out there. It’s great to be able to routinely buy stocks. That’s a position that not all that many people in the world find themselves in.

    Best wishes!

  66. DD,

    That’s a solid watch list across the board. There are some companies on that list that I’m interested in purchasing right now as well. MSFT’s recent weakness seems to be an opportunity. That might be my second pure play on tech. We’ll see.

    So many stocks, so little capital, even with an inflated market. πŸ™‚

    Cheers!

  67. DD,

    You’ve been busy! Nice job there. Some solid purchases across the board. NOV and BBL stand out to me as particularly cheap right now, but those are all high quality companies.

    What’s your experience with Robinhood thus far? I’m a little leery on having substantial assets invested with a brand new company with no physical branches I can visit so as to talk to someone if need be. That’s probably just conservatism on my part, but I’m not sure if I’d feel comfortable with six figures with them.

    Cheers!

  68. Not planning on buying for a while. With the RV project, I concentrate on getting real debt free. I might get tempted throughout the year if I reach my goals earlier than expected! πŸ˜€

  69. DM, Good job on your freedom fund. I just started August of last year. Getting dividends are good – I received some today. I look forward to the day when I get pass the 100k mark – which is my first milestone.
    Keep up the good work. This is an inspiration for me, to invest as well as to share my ideas.
    Div4Son

  70. I just bought 140 shares of MSFT today at 40.56$. I will add some more if it dips below 40 letting some time between buys.

  71. Hi Jason,
    I do actually look at the broad market in a similar way as your mindset. For that reason half of my available cash is “in the market”, and I would not sell due to a pullback. All of my stocks, many of which are from your list, pay dividends. In fact, I only buy dividend paying stocks. I use the “DRIP” system which makes it easy for me to reinvest in the companies I already like. I agree with you about diversification and for me being diversified is having cash on hand. I am willing to get only 1% (or less) interest on that cash for the sense of security it gives to me. If there were to be a reason that I need cash right away, I would not have to sell stocks to get money. I am a follower of your blog and as a result I have purchased 27 stocks on your list. So do not get me wrong, I like what you are doing and I appreciate that you are, in fact, doing the work for me. I thank you for that. I am not retired because I own and operate apartment buildings. Actually I would not ever want to retire completely. I enjoy what I do for work. I follow your blog and appreciate your writings. I like that you spend the time to reply to every comment.
    All the best. Dan

  72. Thanks for the update. Nice calls and I was looking over T as well. When I hear people say T will fade out I think of all the tech changes since they started and how they keep trucking on. I would have thought the Saudi dying would have moved oil up more than it did. That makes me think there is more room to fall but who knows.

    I am trying to decide on 4 holdings for my Roth to divide up evenly within the next month. I want to focus on high yeilds since I have limited amounts I can add per year. I was thinking T, IBM, CVX if it gets back below 100, and a bank. What do you think? Any ideas.

  73. Nice job as always. Any thoughts on PH? Also any plans to add to your BNS or TD? Looks like there is some good value and nice yields there.

  74. Jason,
    January has been a good month, just like you I was a little busier than anticipated with regards to stock buying. I like the pricing of NOV right now, the yield is very attractive and I am way more comfortable to get in vs few months ago. I added NOV in my watch list when you featured it in your recent buys, while T has always been in my portfolio and to buy list.
    Take care,
    FFF

  75. HI Jason,

    I put $400 in with Robinhood which bought me a handful for VLO shares. So far I am not impressed. Customer service takes a few days to respond, and the is notDRIP option or fractional share purchasing. Between the two, Loyal3 has impressed me more. Loyal3 only offers 56 stocks though. I agree with you, keep your money with a proven broker. I will probably closeout Robinhood next month.

  76. Div4Son,

    That’s an exciting time. I still remember just starting out and watching the account double and triple by the month. It’s funny because I haven’t lost that excitement at all. This is actually even more amazing to me than it was when I first started. I think that’s because financial independence gets closer with every single investment and every dividend received. You can actually see freedom slowly approaching.

    Stick with it! You’ll be surprised with just how much progress you can make. πŸ™‚

    Best wishes.

  77. RA50,

    You have the right attitude there. A large correction like that is an opportunity, especially for those still aggressively accumulating assets. A stock sale is the best kind of sale there is. πŸ™‚

    Unfortunately, Swiss stocks went the opposite way for us here in the US. Looks like I should have bought NSRGY at $70, but I didn’t think it was exactly cheap there.

    You’ve still got 10 years to buy cheap and keep. Plenty of time, my friend!

    Take care.

  78. Dan,

    I meant no criticism. I was simply pointing out a pattern there based on your comments. And I’m not saying that’s good or bad. Rather, I was just mentioning that we look at the market and stock prices slightly different.

    I see no reason to keep a lot of cash around. Keeping a lot of cash around over the last 1-5 years would have been very expensive. Not just in opportunity costs, but also lost dividends that could have been reinvested/compounded. If I found myself with absolutely no stocks to purchase because every stock in the entire market was overpriced, I would accumulate cash. Thus far, I’ve been fortunate in that I haven’t found myself in that scenario.

    Ultimately, we have to do what we’re comfortable with as individuals. I would never recommend investing more cash than one is comfortable with. And if keeping a healthy cash pile on the side allows you to sleep at night, then that’s the right call.

    Thanks for dropping by!

    Cheers.

  79. Pygmycoho1,

    T’s been around a long time. That’s not to say that their past history is any guarantee of future success, but they’ve shown an ability to adapt around technology. I like their chances. In the meanwhile, they have a ton of infrastructure. And they’re diversifying the business. I don’t know where they’ll be 20 or 30 years from now, but the foreseeable future looks bright. The doomsayers that have been calling for their end for years now continue to babble about the same problems. The numbers just aren’t showing it, however.

    IBM appears to be one of the clearest and best values in the market right now, in my view. Their FCF can support growing dividends for a very long time, even without any positive material changes. So there appears to be some upside there if they can execute properly. CVX is also fairly solid, though I honestly wouldn’t be surprised to see it drop below $100 in the near term. That’s about my cost basis, but I picked it up with oil at much higher prices. Earnings season will be interesting, especially toward the latter part of the year. Make sure you average your way in on energy stocks.

    Cheers!

  80. presone,

    PH is a great company. Probably pretty close to fairly valued here. EMR is another excellent industrial company, perhaps trading at a better valuation with a higher yield. Different businesses, however.

    I am thinking of adding to BNS in February. Great yield, solid valuation, and they’ve shown a lot of resilience over the last century or so. I think Canada’s economy could be in for some hurting with a combination of expensive real estate and a commodity-based economy that’s seeing some backlash from cheap oil, but you have to look at short-term problems as long-term opportunities. Keep in mind, however, that short-term problems can last for years.

    Thanks for dropping by!

    Best regards.

  81. DD,

    I never did open that account with RH, though I appreciate the invite. Seems like they’ll have to work out some kinks. Could be a great platform, but I’m not sure if I want to be an early adopter. Nobody likes paying more commission fees than they have to, but paying a couple thousand dollars over the course of a decade or longer to build up a portfolio that will one day be worth millions of dollars seems like a no-brainer to me, especially when we’re talking about security of funds.

    I’d also be careful with Loyal3. I’ve read a lot of complaints about their fills. Most people are seeing their purchases go through at the absolute stock highs, which makes sense. They’re getting you one way or another, no matter what they say. I’ve noticed when other bloggers report their Loyal3 buys, the prices are very high relative to what opportunities were there.

    Thanks for sharing!

    Cheers.

  82. DD,

    Nice buy there. That’s some serious capital you laid out. I wish I could make purchases that large! πŸ™‚

    I may end up joining you as a shareholder at some point here. We shall see.

    Thanks for sharing!

    Best regards.

  83. DM,

    Your portfolio growth chart serves as a reminder to everyone that your unintentional? timing to start on your financial freedom journey corresponds beautifully with a huge multi-year bull run. The stairs upward won’t always be there even though they’re dominant now, but it seems like you’re already mentally prepared for the inevitable “bad years” and anxious to take advantage of them rather than weep about the chart changing from a ladder to a chute πŸ™‚

    Congrats on the T purchase! I recently made a similar purchase myself (VZ) and the only reason I didn’t go the T route was because I’m fairly loaded up on them at a decent cost basis already. If I weren’t it would have been my top buy around $32.

    Best,
    DWC

  84. Gents,

    I hear you. I pulled it off in year one with 50% leverage. In year two, with some long/short positioning I managed to increase my bankroll by 72% above and beyond my withdrawals (extinguishing the margin loan and then some).

    The main thing I have going for me is I got in to lots of high yield (but low growth) names just before investors started chasing yields en masse due to the crash in bond yields. So I have a lot of high yielders returning just over a weighted average of 10%. My lifestyle burn rate is about 9.86% of the new balance so I’m covered without having to touch the balance. I write options around what I have to grow the bankroll ahead of inflation.

    I think for most people, most situations, 15% withdrawal rate would be insane but I came out in the midst of a raging bull market poised with leverage to capture the upside. I came out of it OK and am doing better year by year since going FIRE. I think I’ll be OK. But its a do as I say thing instead of do as I do…

  85. Hey there again!
    I agree about bns and nov. It may take some time, I know. But this is a good price point to get in. I also like “O” ( Realty Income Corp). I realize that it is interest rate sensitive and will react disproportionately, but when people realize that O’s leases have inflation and cost of living indexes built in; i.e. rents go up, the stock will continue to pay and increase dividends. I would not mind at all seeing a pullback in O with the first interest rate increase. I would jump on that.

  86. Jason,
    I have been buying shares of T for the last 2 years when the price dropped below $33 and it is my 12th largest holding. I use DRIPs for some of my holdings, and it is far and away the best performer from that standpoint.

    I have been waiting for NOV to drop below $50 so that I can double my stake in the company. We may get a chance even if the price of oil goes up since capex is being cut by the oil companies. NOV is a great company.
    Be blessed,
    KeithX
    ps Freedom begins 8 weeks from tomorrow at 4PM.

  87. I really like your purchase of AT&T, I might increase our position as well. Looks like you’re almost at the $200k mark. Must be hard to imagine yourself cracking the $200k milestone say 2 or 3 years ago right? Just shows how powerful continue saving each month is.

  88. DWC,

    Good point there. In some ways the timing worked out pretty well since there’s a level of success (portfolio value) that’s easy to relate to. So I can kind of point to that and show that this stuff works. On the other hand, it worked as a headwind because stocks incrementally became more and more expensive over time, meaning my dividend income today isn’t as high as it could have been had the market not been so hot over the last few years. Pros and cons like anything else in life. πŸ™‚

    Looks like you’ve been really busy over there. Love the recent moves. DIS is a company that I’d love to add to. Great job building up that position. What a fantastic business.

    Keep it up!

    Cheers.

  89. Gareth,

    Glad to see you’re still at it. πŸ™‚

    T seems solid here. Not a steal, but few companies are right now. Meanwhile, that sizable dividend will help me reload my BB gun just a little faster.

    Take care!

  90. KeithX,

    The final countdown continues. πŸ™‚

    I hear you there on NOV. I’m interested in adding to my position maybe one more time as well. We’ll see where it goes this month. I wouldn’t even need it below $50, as I think it’s a great buy anywhere near this level. Though, due to my desire to keep it a small position and my weight to energy, I may be a little selective there. But I definitely wouldn’t be opposed to buying more in the mid-$50s.

    Thanks for dropping by!

    Best wishes.

  91. Freedom is 52 days away for me as well!

    Jason,

    If you don’t mind me asking, what WP plugin do you use to get those nifty grafts?

    Thanks.

  92. Sounds like a pretty good month. I also got excited about some opportunities this month and invested more money than I was initially expecting to but NOV and HP were booth steals this month so I was happy to do it.

  93. Nice job!
    Giving any thought to Costco?
    $5 special dividend might make me stop waiting for a pullback that never seems to come

  94. Hi Jason
    Have been following your blog for a while now and appreciate your detailed analysis and insights.
    Just wondered what you thought of Diageo as I don’t see it in your portfolio or watch list.
    Picked up some Unilever around 41 a while back after reading your analysis ….and thought Diageo might be a similar type story.

    Thanks for sharing your story

    R

  95. Nick,

    I know exactly how you feel. Tough to stay on the sidelines when there are so many stocks out there to purchase. πŸ™‚

    Keep up the great work!

    Best regards.

  96. Bill,

    The $5 special dividend is nice, but it’s just tough to pay 30 times earnings for Costco here. WMT has grown at a similar rate, offers a much higher yield, and is available at a substantially lower valuation. A P/E ratio of 30 is high even for Costco, which is ordinarily priced at a premium.

    I wish I would have picked up Costco a year or two ago when the valuation was much more attractive, but the price here seems rich after a 30% run-up over the last year.

    Cheers!

  97. Ralph,

    Thanks for following along. Appreciate the readership! πŸ™‚

    I like Diageo quite a bit. Wouldn’t mind it here, but would prefer it closer to $110, which it has hit a few times recently. Every time it hits that mark or comes close, I end up finding something else. But I suspect I’ll end up buying DEO at some point. Solid company, great brands, global exposure, attractive yield, robust growth. Great margins as well. Not much to dislike there.

    Stay in touch!

    Best wishes.

  98. Hi Jason,

    I have Telus on my watch list and have been waiting for it go on discount ever since. I think Telus is the Canadian brother of AT&T since they have the same ticker. However, the telecom sector has been doing very well lately and its not dropping to an attractive buy price. Will add AT&T to my watch list as well. πŸ™‚

  99. Accumulating while market is flat or a bit down will power your purchases and give nice fruits in near future.
    Just save and buy more and dividends will increase your wealth in a very healthy way!

  100. Thanks, DM. The fourth quarter allots me the most income to deploy so I have tried to take advantage of that. Now I’m winded after the sprint so it’s time to jog for a little while and slowly rebuild my ammo stockpile.

  101. Jeff,

    I like Telus as well. Hard to directly compare the two as Telus is a fraction the size in a very different market, but Canada has some solid telecom options up there. Bell Canada seems like a good bet, too.

    Thanks for dropping by!

    Take care.

  102. BeSmartRich,

    Big congrats on crossing $100k! That’s fantastic.

    Although many of us aren’t in this for the net worth/portfolio balances, it’s a healthy byproduct of hard work and consistent saving/investing. Just proof that things are working and you’re on the right track. And it’s cool to say you’ve got $100k+ in your portfolio. πŸ™‚

    The next $100k may be even faster. Keep it up!

    Cheers.

  103. First of all I would like to thank you for this fantastic blog and your long time contributing.
    You opened my eyes to long term portfolio with dividend income.

    I saw, that you have a very good timing, because you start portfolio after global recession.
    From 2010 all stocks market growing.

    Do you have some plan for oposite market? Would you like to continue buying of more shares for cheaper prices or sell some significant part of portfolio and start again with lot of cash to redistribute your portfolio ?

    What is your look about diversification, I read some opinions, that a lot of stock is not good for diversification because its work like market. The author of this opinion spoke about good diversification is a portfolio with 10 till 15 diferent stocks and also different sectors.

    Have a nice day, and lets portfolio grows.

    Eddie

  104. Eddie,

    Glad you’ve had your eyes opened a bit! πŸ™‚

    Yeah, if the market drops substantially, I’ll be quite happy. That will allow me to buy more stocks with the same amount of money. Cheaper shares equals higher yields, so that would be fantastic.

    Those who point out how successful I’ve been because the market has risen so much over the last five years obviously don’t get what I’m talking about or what I’m after. I’d MUCH prefer the stock market was still priced as it was back in 2010 or 2011. My dividend income would be much higher. Much, much higher. But it’s a headwind I deal with. The stock market fluctuates. The best you can do is pick out the best stocks you can at the best price available. That’s pretty much it.

    As far as diversification goes, I think I’m widely diversified across equities. I’d like to eventually diversify across asset classes, specifically bonds. Unfortunately, rates preclude that for me right now. But I wouldn’t mind some fixed income when it’s more attractive.

    Cheers!

  105. Thank you for reply.

    Some idea to upgrade your graph of value of your portfolio.
    Please show to your today(this month) value a different column of invested money. We will easily see the ratio of growth of your portfolio.

    Eddie

  106. Eddie,

    The software I use unfortunately doesn’t allow me to run multiple columns like that. However, I’m not sure it’d be particularly useful either. But if one wanted to know that, I publish all of my purchases, meaning it’d be pretty easy to track. And you can also view the monthly changes in value as well via these posts. πŸ™‚

    Cheers!

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