Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it’s aptly named. My portfolio is my way to freedom; freedom from a job I don’t desire to purchase goods I don’t need to impress neighbors I don’t care about. This journey is all about freedom and flexibility. One day, the dividend income this portfolio generates will fully cover my expenses and my time will be completely my own. What could you possibly want to own more than your time?
I’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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.
June was crazy, incredible, and exciting. It was just a lot of fun.
I was fortune enough to stay incredibly active and pick up shares in a number of excellent businesses at what I feel are really attractive values relative to their respective intrinsic values and long-term earnings power. I’m fairly confident that each of these companies will reward shareholders (including me) for years to come with increasing dividends on the back of increasing profit.
I started the month the same way I ended it: I added to my position in Union Pacific Corporation (UNP) both at the beginning of the month and on the very last day of June. Really excited about the long-term potential here. If the last 150 or so years have anything to say about it, the next 150 years should be pretty profitable.
I also decided to average down on W.P. Carey Inc. (WPC), a REIT I continue to really like here. It’s highly likely I’ll buy more stock in WPC over the course in July at even lower prices.
Those transactions alone put some serious capital to work. But I also decided to have some fun this month and strategically bolster a few positions by spreading some capital out a little. I used some free trades in my Scottrade account to top up positions in T. Rowe Price Group Inc. (TROW) just four days into June, then just a week later Wal-Mart Stores, Inc. (WMT). I didn’t sit on capital long, deciding to double my stake in Apple Inc. (AAPL) after a blockbuster quarter and then also adding to to the midstream pipeline company, ONEOK, Inc. (OKE), after reduced guidance.
But it wasn’t all just adding to existing positions.
I also initiated a stake in Travelers Companies Inc. (TRV), which is just a fantastic company operating in an industry I’ve long wanted more exposure to. P&C insurance is an industry that’s been making a lot of money for a long time now, and TRV is one of the higher-quality companies in that space. I’m really bummed out that Chubb Corp. (CB) and HCC Insurance Holdings, Inc. (HCC) are being acquired. I was planning on buying stock in both companies and expanding my P&C exposure after building up TRV. But there are still plenty of fish in the sea.
One company that I’ve long watched from afar due to what I thought was constant overvaluation is Hershey Co. (HSY). I finally saw an opportunity to invest in the company after seeing the stock slide more than 10% YTD. It’s still not particularly cheap, but it’s a great company with a super simple business model that should make money and be able to send out more dividend income for decades to come.
Lastly, I initiated a position in Gilead Sciences, Inc. (GILD) toward the middle of the month. Admittedly a somewhat speculative investment due to their extremely short dividend history, the stock is otherwise checking off just about every box I have. Value, quality, and growth all exist in abundance. I’m anxious to see how this one turns out over the next decade or so.
So 10 transactions, all in all. And a little over $6,000 in fresh capital and dividends invested. A blockbuster month and definitely records for me in regards to both the amount of money I invested and the number of transactions. Those are records that are unlikely to be broken anytime soon. But I’d also be happy if they stand forever. I don’t really need insane months like this past June to reach my long-term goals. Of course, they’re wonderful to have. And it was just a lot of fun. But I also know they’re not necessary and will be few and far between.
However, activity in the portfolio wasn’t limited just to what I was doing.
The acquisition of Lorillard, Inc. by Reynolds American, Inc. (RAI) was completed in mid-June June, which provided a lot of the BBs for my BB gun this past month. I received a little over $2,500 in cash and 14 shares of RAI for the 50 shares of LO I owned. So the LO position is no more, replaced now with the RAI position (which I’m going to keep, but not add to anytime soon).
In addition, Baxter International Inc.’s (BAX) previously announced spin-off of Baxalta Inc. (BXLT) was completed in June. So I know have a new position in BXLT (which I’m also going to keep, but not add to anytime soon). I’m excited to see how the separate entities operate and prosper. Spin-offs in general have been very kind to me, and I see no reason why this transaction will be any different. I’d generally prefer most companies remain as one, but I’m not running a publicly traded company. I defer judgement.
The current market value of the Freedom Fund stands at $197,385.27, which is a 1.1% increase over last month’s published value of $195,305.61. The portfolio actually closed at over $200,000 in market value for the first time ever on June 18, 2015, which comes just over two years after hitting the six-figure mark in March 2013. I guess the first $100k is the hardest, though a lot of that depends on the very fickle and very moody Mr. Market. Not exactly what I’d want to rely on for, say, financial independence and drawing down assets. But it’s a really fantastic milestone to hit. The hiccup on June 29 (due to fears over Greece) dropped my portfolio’s market value rather significantly, however, and it never recovered. A 2% broader market drop like we saw on Monday affects my portfolio by roughly $4,000 due to its size, which is a great first world problem to have. It’s a “problem” I hope continues – cheaper stocks means higher yields. New dollars buy more dividend income when yields are higher and I’m that much closer to my long-term goals.
I’m so excited with how June went down and where the portfolio is sitting right now. The Fund is an absolutely dynamite collection of some of the best companies in the entire world. All of them should remain exceedingly profitable for years to come and I expect my dividend income to increase annually like clockwork.
Hopefully, the troubles in Greece keep volatility high and we see larger pullbacks. It seems the market was expecting fireworks this past Monday, and instead we got sparklers. A lot of people were spreading noise and speculating the market was going to drop by 5% or 10% right off the bat, but we didn’t see anything even close to that. That’s exactly why you can’t time or predict the market. Stick to a long-term plan through the ups and the downs and your future you will thank you for it.
July certainly won’t be as buy as June. But I do expect to be able to make at least a few stock purchases. Cheaper stocks would help my limited capital that much more, so we’ll see what we get. Regardless, I’ll be putting fresh capital to work regularly throughout the month, just like I’ve consistently done for more than five years now.
The Fund has positions in 62 different companies. As aforementioned, I initiated three new positions and was given a new position in BXLT over the course of June.
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, 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 exercise 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 UNP, WPC, TROW, WMT, AAPL, OKE, TRV, HSY, GILD, RAI, BAX, and BXLT.
What happened for you in June? Buy lots of stocks? Portfolio performing as expected? Excited for more pullbacks?
Thanks for reading.
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