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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and keeping track of total return, as well as giving context to the dividend income I earn, my main focus is on the rising dividend income stream the Fund provides.
July was another really fantastic, fun, and fortunate month. I’ve been very active lately in regards to putting fresh capital to work and buying high-quality dividend growth stocks, far more active than my historical average over the last five or so years. Not sure how long my ability to remain so will persist, but I’m of the opinion that one should make hay while the sun shines. And I’m glad to say the sun has been shining on me lately.
I kicked the month off by averaging down on W.P. Carey Inc. (WPC) one more time. A fantastic real estate investment trust with high-quality assets that appears to be trading for less than it’s worth. Wouldn’t mind maybe buying one more tranche if it drops again. I may even add a little more where it currently sits. We’ll see.
Shortly thereafter, I picked up shares in National Oilwell Varco, Inc. (NOV) for the last time. I now consider myself fully invested in that company, if not overexposed. I’m still contemplating a tax-loss strategy to reduce my position slightly and offset some capital gains on the year, but I’m also quite confident about NOV’s long-term potential.
Those two transactions alone would be a solid month, and one I’d be grateful to have.
But it didn’t stop there.
I noticed the nice little pullback that many high-quality stocks in the Industrials sector have recently experienced and took advantage there by initiating a position in Caterpillar Inc. (CAT) and then later adding to my stake in Emerson Electric Co. (EMR) for the first time in years. The latter is now a full position for me, but I was very excited to have had the chance to buy stock in Emerson for roughly the same price I paid a few years back. CAT, meanwhile, is one I’m definitely interested in averaging down on at some point in the near future. I don’t see it as a particularly large position when it’s all said and done, but I wouldn’t mind at all doubling down.
The last stock purchase to report on for July was that of ITC Holdings Corp. (ITC). A high-quality electricity transmission company, the growth rate is phenomenal. The recent Q2 2015 earnings report further convinced me that I made the right call on this one. Yield is a bit low, but I’m very excited about where this company might be in 20 or 30 years from now. This was another new position for the portfolio.
All in all, a really great month here. I’m happy with all five purchases, which, in aggregate, added $235.50 to my annual dividend income.
The current market value of the Freedom Fund stands at $203,440.93, which is a 3.1% increase over last month’s published value of $197,385.27. The Fund is performing rather well, even with my overexposure to the Energy sector. Increases of 3% or more will be much harder to come by as I move forward, however, due to the growing size of the portfolio. But that’s a first world problem I’m not unhappy to have.
Crossing the second $100K is an amazing feeling, as I recently shared. Although I’d prefer cheaper stocks (which would naturally mean my portfolio value would also suffer) because cheaper stocks come attached with higher yields, which furthers my long-term goals and plans, I’m also not particularly upset seeing the value climb like this. It’s simply an outcome of investing in high-quality companies that become more profitable (and worth more) over time. Invest intelligently and you basically can’t avoid an ever-rising portfolio value over the long haul. It’s really a win-win either way. You either have a portfolio that’s rising in value, boosting your net worth and psychological well-being, or you get cheaper stocks that allow your fresh capital to go that much further.
My first public update on the Fund was back in April 2011 – it was valued at under $29,000 at that time. And here we are a little more than four years later and the portfolio is seven times larger. The time has just flown by, which is really why it’s never too early to start saving and investing. Had I not had decided to start down this path back in 2010, I might be sitting here still worth less than a baby. And what a shame that would be. My entire life would be different. And I wouldn’t be nearly as happy as I am now.
Looking forward, I should have enough capital for at least three purchases in August. And since I just mentioned how important it is to be consistent, you can count on exactly that from me. I’ll be deploying that capital over the course of the month into the highest-quality dividend growth stocks at the best possible values I can find, assuming I have room in the portfolio for them.
I’m obviously hoping for more volatility. We’ll see what we get, but I definitely wouldn’t mind seeing many of the stocks I’ve recently been buying or eyeing drop another few percentage points. I’m keeping my fingers crossed!
The Fund has positions in 64 different companies. This is an increase since last month due to the fact that I initiated positions in CAT and ITC.
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 WPC, NOV, CAT, EMR, and ITC.
Did you have a great July? Able to deploy a lot of capital? Looking forward to August?
Thanks for reading.
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