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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and keeping track of total return, as well as giving context to the dividend income I earn, my main focus is on the rising dividend income stream the Fund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.
August turned out to be a really, really fun month. There was plenty of volatility, and I took advantage of that as the month wore on, averaging my way into high-quality dividend growth stocks as my capital allowed. I unloaded the last BBs in my BB gun just before a large herd of prey jumped out of the woods – the stock market swayed pretty heavily toward the end of the month. Fortunately, I’m reloading as we speak, and the deals are still plentiful.
Looking at my capital deployment from August, I’m rather pleased.
First, I’m incredibly fortunate to even be in a position where I’m able to regularly save and invest. Adding to that, an ability to substantially save and invest thousands of dollars per month is just incredible. And then having access to high-quality dividend growth stocks that are available for fair value or less is a fantastic long-term opportunity.
So almost as soon as August began, I averaged down on my position in Caterpillar Inc. (CAT). Nearly yielding 4% at the time of purchase and more than two straight decades of dividend growth, I feel confident about my ability to collect a very attractive dividend check here that’s surely going to grow over time.
Shortly thereafter, I initiated a position in United Technologies Corporation (UTX). This was the only new position for the Fund this month, but it’s just a great company. I’m very excited about its future prospects, its ability to generate rising profit over its cycles, and the likelihood of it growing the dividend at a rate well above inflation over the long term.
Although it wasn’t planned, I doubled my stake in Walt Disney Co. (DIS) when the stock cratered after reporting record net income for its 2015 Q3 results. In hindsight, I wish I would have waited a bit on this one. The pitch was nice, but a fat pitch was waiting just around the corner. The stock dropped not only from concerns specific to the company over cord-cutting and how that’ll affect ESPN subscription numbers, but then also later due to the broader market pullback. But hindsight is 20/20 and timing isn’t really all that important for the long-term investor. I thought, and still think, DIS is attractively valued. Still deciding how heavy I want to go here, but recent dividend growth has been absolutely stellar.
Finally, I bought more stock in Union Pacific Corporation (UNP), which is perhaps the best-run railroad in the country. I love the business model and the built-in competitive advantages. This might be the last time I pick up shares in UNP now that railroads represent about 5% of the portfolio. But I’m glad to have these 50 shares here, which will likely pay me growing dividend income for many, many years to come.
Just incredibly blessed to be able to put so much capital to work here in a variety of high-quality companies. These four purchases, in aggregate, added $137.40 to my annual dividend income.
The current market value of the Freedom Fund stands at $196,826.45, which is a 3.3% decrease over last month’s published value of $203,440.93.
So the Fund held up pretty well through the commotion, which isn’t surprising or unexpected. Due to the low beta of many of the stocks I invest in, the portfolio tends to oscillate less than the broader market, especially when volatility picks way up. And high-quality companies (along with their respective stocks) usually do well when there’s uncertainty, like we saw during the financial crisis. However, the fact that I’m not reporting a portfolio value of $180,000 or something similar on the back of a more significant broader market correction is disappointing. Hopefully, we see even more volatility in September.
Looking forward, I won’t have quite as many BBs rolling around in my BB gun this month compared to what I was rocking in August. Quarterly estimated taxes are due and recent dental work took a chunk out of my savings. But I expect to still be quite active, perhaps being able to land as many as four stock purchases. Should be very, very exciting.
We’ll see how it goes. As always, I appreciate all of your support. Every day is an opportunity. So let’s not forget that. Let’s continue to save and invest our way toward financial freedom.
The Fund now has positions in 65 different companies. This is an increase since last month due to the initiation of a position in United Technologies.
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 to build a rising and sustainable 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. I 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 all aforementioned stocks.
Have fun in August? Take advantage of the volatility? On track for your goals?
Thanks for reading.
Photo Credit: BimXD/FreeDigitalPhotos.net
Looking good Jason!
Have you considered how many companies your porfolio should consist of?
Do you have truble keeping up with different metrics of the companies?
That BB gun is getting more dangerous for every month that passes 🙂
Take care
Dividend Freedom
I, like most of us, experienced a dip in my “freedom fund” as well. But this is expected from time to time, and fine by me as I know all new capital contributions are now going in at a relative discount. September should be a very good income month for me, so hopefully I can put that money to work before a “rebound”.
Congrats Man…got to love a pullback. I initiated a position in CAT myself after watching the stock for years. I think i will average down my position in JNJ this month…stock is priced pretty attractive at these levels. Still not sure if oil is done declining. I have a feeling there is more pain ahead, but with winter coming it may just spike back up. Time will tell. Take care
Yeah it was a pretty tough month for portfolio value, although not too bad. Were certainly a lot of opportunity to load up on stocks and cost average down. I was only able to build up one of my positions, but am looking forward to some more opportunities in the next month with the Fed’s interest rate announcement coming up, plus continuing weakness in China.
All the best, and keep it going!
Hello DM,
I’ve been following your blog for a few months now and I really enjoy reading all the articles and learning more about how dividend investing is the way to go!
I was wondering if you have heard of Motif? Where you can invest in up to 30 stocks for $9.95 a trade?
What are your thoughts on it and would it be a good idea to use for dividend stocks?
Thanks,
Lawrence
Looks alright considering the market drop in recent weeks. Dividend income is more important than portfolio value.
Looks like another excellent month for you Jason. My portfolio took a bit more of a hit although I didn’t get to soften the blow any with new capital for purchases. Hopefully the volatility remains because it opens up a lot more value. Best of luck in September.
Great job Dividend Mantra. My portfolio decreased as well by 3-5%. Well it was down by over 10% but recovered some back. Well… this means, I should be able to buy more quality companies at discount so I am not going to complain about it and move on. Let’s focus on dividend income which is more directly related to financial independence. Thanks for sharing!
Wow looking great! I love your averaging strategy, pacing yourself. One thing your blog inspired me to do is buying 10 shares, sometimes 5 shares at a time. You can’t get to $10k/yr dividend without getting that 5$ dividend paycheck. You taught me patience. Thanks for sharing your portfolio.
US is working on a china sanction. The selling frenzy, saga might continue. In the meanwhile, we’ll continue to build our portfolio $5 at a time. 🙂
Cheers!
I added some Disney too, both when it dropped and when it dropped the second time down to 100. I think the Star Wars franchise is really going to be huge for them (was already in the stock price, but I think it will be more valuable after the next movie sets records).
Glad to see your portfolio survived the carnage. Mine was down slightly, but I have more than just stable dividend stocks!
Just back from 2 hours at the dentist with another hour scheduled next week. The freezing is just coming out and both my mouth and wallet hurt. Less money for me to invest in September because of it.
I know you already have a selection of REITs in your portfolio, but I was wondering if you’ve ever looked into the two publicly traded REITs that own farmland – FPI and LAND. Contrary to public perception, only a very small percentage of farm land in America is corporate owned, and people are always going to need food. Good luck with your investments!
August was an AWESOME month to be in accumulation mode. A temporary dip in the Freedom Fund means a stronger foundation for growth in the future. Most of us experienced a dip in our investments last month – me very much included. It happens. Ironically, it’s what keeps the stock market growing and reality very much in balance.
Congrats a great month. It is great that you were able to invest so much in the month and the market volatility definitely helped to make the investments go a bit farther. I also used the opportunity the last week of the month to make couple of big purchases in addition to my regular weekly purchases.
DF,
Ha! Yeah, the BB gun is becoming heavier over time. But I still wield it like a champ. 🙂
I haven’t really given thought to a limit on the number of companies I’ll own. There are still a lot of great business out there that I don’t own a slice of. So when I run out of great ideas, I’ll probably stop initiating new positions.
But I discussed how it’s not all that difficult or time consuming to keep up with a large portfolio here:
http://www.dividendmantra.com/2014/11/is-managing-a-large-dividend-growth-stock-portfolio-time-consuming/
It’s admittedly easier now that I don’t have the full-time job anymore. But I was managing a pretty large portfolio even back when I was working 50 or 60 hours per week, blogging constantly, working out, and everything else. If it were that challenging, I wouldn’t have been able to keep up.
Thanks for dropping by!
Take care.
FF,
Glad to hear you’re looking at a solid month over there. The last three months or so have seen me invest far more than my long-term average, which is wonderful. I try to take advantage when I can.
But those dips should absolutely be expected. In fact, this recent run is pretty much unprecedented. It’s not common to go on this kind of massive run. It’s a shame it’s been like this, because I’d be even closer to my goal and I’d be earning more dividend income if the market wouldn’t have run up so much. But such is life. Over the course of my entire life, there will be many other things that matter much more than stock prices. Cheaper is of course always better, but you just have to take what you can get sometimes.
Have fun in September over there!
Best regards.
Josh,
I’m with you. Love pullbacks. I wish pullbacks would run for president. I’d vote! 🙂
Nice job adding to those positions on the cheap. The recent volatility is a gift for long-term investors. Let’s hope the holiday spirit lasts.
Cheers!
DW,
Hey, building up one position is better than building up zero. I just couldn’t imagine still being the Jason of 2009 where I had no portfolio. And it wouldn’t really be all that crazy to think that in some alternate universe, there’s a Jason out there that just never decided to start saving and investing. So I think it’s always important to remember how blessed we are to save and invest at all. Sometimes I wish I had more money to invest with, but then I quickly snap back and realize just how wonderful life is.
Let’s hope for even more volatility. Today’s a nice start. 🙂
Best wishes.
Hey Jason, look what I found!
http://www.businessinsider.com/why-im-glad-i-had-a-job-i-hated-2015-8
I like this website, cool to see you get published on there.
Lawrence,
Thanks so much. Appreciate the readership and support! 🙂
Motif seems okay, if a bit gimmicky. The $9.95 for 30 stocks works out pretty well on the initial building if your Motif, but the fees coming and going afterward are pretty much on par with many other brokerages. And I’d caution just buying 30 stocks all at one time unless you’ve already done all the research and everything else. Diversification is wonderful, but it’s no substitute for knowing what you’re buying.
Best of luck over there!
Cheers.
Tawcan,
Couldn’t agree more. And in that regard, the last month was a big step forward. 🙂
Let’s keep it rolling!
Cheers.
JC,
I’m with you, bud. Hoping for even more value. I see some of the REITs are looking attractive once more. Added to OHI today just pennies away from its 52-week low. Might have missed the bonanza at the end of August, but some stocks (like OHI) are even cheaper today than they were then.
Let’s hope it continues!
Thanks for stopping by. Hope all is well with the family.
Best wishes.
BSR,
You’ve got the right attitude. The dividend income (assuming you plan on living off of it solely) is what will buy you your freedom. Thus, the portfolio value matters very little, if at all. Prices come and go. Great companies will, of course, see their stock prices rise over time. But volatility should always be something that one looks forward to and takes advantage of. I see some solid deals out there today, so I’m back out hunting! 🙂
Cheers.
Vivianne,
Yeah, I’m definitely pacing myself. Well, as much as investing $5,500+ over the last month could be considered pacing. But the journey to financial independence is built one stock purchase and one dividend at a time. It’s a 10-year+ journey for me, so it’s not going to happen overnight. But anything worth having is worth working hard for (and worth waiting for).
But those pennies do add up:
http://www.dividendmantra.com/2014/02/the-power-of-pennies/
Keep adding those shares over there!
Cheers.
Vawt,
I’m with you on Disney. The Star Wars cash machine is just now cranking up, but they’re planning on releasing a ton of movies, a ton of toys, and adding theme parks there. We haven’t seen anything yet. And then you have all of the other franchises that are absolutely killing it. I’m very, very excited about the next five or ten years for Disney. 🙂
Glad to be a fellow shareholder with you!
Best regards.
beth,
I know how you feel, unfortunately. I had to get four fillings in August, so that put a slight crimp on the cash for me. But we don’t want to be toothless investors, right? 🙂
Hopefully, the pain (for both your mouth and wallet) disappears soon.
Take care!
Jim,
I’ve never run across them. It looks like LAND’s dividend is all over the place. Meanwhile, FPI just recently had an IPO. So neither has any kind of dividend growth track record. Might be interesting to take a look at FPI again in a few years to see how that shakes out.
Good luck with your investments as well!
Best regards.
Steve,
Agreed 100%. Every dip in prices means yields are that much higher. And it’s those yields – the dividends – that will really buy me my freedom. Even those that aren’t relying on dividends should welcome cheaper prices as it means more shares for the same amount of money. As such, pullbacks should be very, very much welcomed with open arms. I know I’m enjoying September already. 🙂
Keep it up over there. Keep accumulating and buying yourself freedom.
Best wishes!
DGJ,
Thanks so much. It was definitely a busy month. The last few months have been really crazy for me. I’m batting way above average right now, so I’m just hoping I can keep it up for a while here.
Nice job there kicking out some extra capital on top of those regular weekly purchases. Every share and every dividend puts us that much closer!
Thanks for stopping by.
Cheers.
EWB,
Yeah, BI asked me if they could republish the article. So it’s great to get that exposure out there. It was also featured on Lifehacker. 🙂
I included that BI piece in my media collection a little while back. I’m always hopeful that the content reaches and inspires even more people. Doing my best!
Cheers.
I look forward to reading your new articles on a regular basis. You are so calm, even when the market dips. I find that so inspiring. Wow, 65 positions! That’s great. Jason, would you consider adding PAA to your portfolio? I believe PAA is on David Fish’s list of Dividend Champions and have been raising their dividends for about 14 years, if I’m not mistaken. Morningstar rating:
http://www.morningstar.com/stocks/XNYS/PAA/quote.html
What are your thoughts? 🙂
Jason do you keep “dry powder” in your portfolio to be able to take advantage of pull-backs, or are you pretty much “all in” believing that “time in is more important than timing”? Thank you.
LPI,
It’s funny. I guess I’m just wired differently from a lot of people. To me, red is green and green is red. Volatility just doesn’t bother me at all. The more, the merrier. 🙂
As far as PAA goes, I’ve honestly never taken a good look at it. I’m pretty much topped up here in the midstream space, so I have no room for something like PAA. Generally speaking, I prefer the GP due to the higher growth rate, stronger total return proposition, and less complicated tax structure. PAA’s GP doesn’t have that lengthy dividend growth track record, however. Either way, I would take a strong look at DCF there and make sure the payout (both at the LP and GP levels) is sustainable.
Good luck!
Cheers.
Mike,
I’m not sure if you’ve been following the blog lately or not, but I answered your timing question very recently here:
http://www.dividendmantra.com/2015/08/time-in-the-market-trumps-timing-the-market-for-the-long-term-investor/
I generally invest my cash as I generate it, keeping only what I need for potential emergencies and taxes. Not necessarily the minute I collect a buck, but I don’t hold cash long. I prefer cash flow over cash, as I’ve discussed before at length.
Each investor has to find what works for them, but I’m no market timer. I haven’t yet found a period of time where I couldn’t find one attractively valued high-quality dividend growth stock. And holding cash over the last few years would not have worked out all that well, with few pullbacks amidst a relentless rise. Might work out better in the future, but time in matters far more than timing. And it’s time in that I’m able to excel at, fortunately.
Cheers!
Good Day Jason
I enjoyed reading your August journey. Reading about you putting your money to work for you was sooo cool. Like you I have been picking up some stocks, PG 10 shares and WFC 25 shares today. I placed a order for a couple more stocks but they haven’t hit the bid price yet. the down turn hit my portfolio but I have been adding to my positions on the way down. I do have one question have you ever looked at Blackstone (BX) I was just curious. I am just started looking at it. I also looking at DIS to add to my portfolio. Keep up the good work, and hope you profit during this sell off.
Cheers
DM:
I suspect you, and many others here, will get the dip you are looking for. Although I suspect more than a “dip” – I expect a slow but steady decrease for many years. IMO, valuations have been inflated for quite some time now. I also think we are heading into unchartered waters. I say that because I do not think the eventual recovery will follow those we seen in the past. I think we are in for a very long and slow decline and even even slower eventual recovery into the positive direction. I would not be surprised to see the DOW drop below 9,000 within 2 years and ultimately hover there over a prolonged period. We’ll see. Could spell trouble for value/growth investors. Dividends investors will fair better so long as they are in for the long term and dividends do not get slashed
Michael,
Nice work over there! I put some capital to work today as well. Love these pullbacks. Hoping we see another big one tomorrow. And the day after that. And the day after that… 🙂
Haven’t really looked at BX. Kind of a spotty dividend track record over the last decade. If I were to add more asset managers to the plate (and I probably will), BLK, BEN, EV, and AMP are a few I like.
Have fun over there. Let’s keep marching forward!
Best regards.
Chris,
I hope you’re right, my friend. Although no one (you and me included) has any idea what the stock market is going to do tomorrow, the next day, or next year, I certainly hope we see a prolonged and major correction. My cash flow needs all the help it can get. I’ve said it before and I’ll say it again, but the stock market’s nearly relentless rise over the last five years has been a major thorn in my side. If we were still sitting on 2011 or 2012 prices all along, I’d be earning a lot more dividend income and I’d be a lot closer to where I want to be. I guess we’ll see. 🙂
Cheers!
Greetings from Sweden Jason! Thank you for your nice blog and your inspirational articles!,. I have been a reader for quite some time and use your articles as a good information source for US dividend stocks to pick up. Most swedish companys pays dividends once each year so its always refreshing with US quarterly/monthly dividends!The turmoil in the market has also hit us here so its been hard chosing between all the stocks for sale. Ive added to my positions in XOM, JNJ and OHI and a couple of swedish ones. I think we all wish for more cash to invest but hopefully the market stays this way for a while.
Best Regards
Claes,
Thanks so much for following along from Sweden. Much appreciated! 🙂
I can imagine the quarterly and monthly dividends are a nice respite from the mostly annual payouts you get over there.
It’s funny, but I’m always wishing for more cash. I don’t think I’ve ever once come across anyone who thought they had enough cash to invest and didn’t want any more. As asset accumulators, we always want more cash and more stocks. Just the nature of the beast. And freedom is something that I think we all want sooner rather than later. But keep averaging your way in one share at a time. It does add up mightily over time.
Let’s hope for more volatility!
Best wishes.
Jason,
Great month again and your four stocks you purchased this month are on my watchlist. Solid companies to own and with the market giving us a sale I see more purchases for you sooner than later. I just had my first $1,000 dividend income month and hopefully it’s one of many many more to come.
Keep up the great work you’re doing!
-DD
DD,
Congrats on your first $1,000 month over there. That’s fantastic. Feels great to collect checks that add up to that much money for essentially doing nothing. 🙂
Let’s hope the recent action continues. I’ve read before that September is historically a bad month for stocks. Well, that’s a great month then for long-term investors who look to accumulate stocks at cheaper prices. Opportunity awaits!
Take care.
We got a nice triple-dip this past month with the volatility…our new dollars bought more shares, our companies that are buying back stock got more shares retired and our reinvested dividends bought more shares. All good if you ask me!
I added one new position in August, AMCX after it sold off with DIS. I think it’s the best media company around and selling for pretty cheap too but unfortunately they don’t pay a dividend. Added to VTR, MSFT, ITC, MMP, SEP, EPD and CSCO. Mo’ Money!
Your bar graph is remarkable when you compare 2011 to front month!
Jason, have you had much luck surrounding yourself with like minded people beside on the internet.
I personal have not, everyone wants to keep up with the Joneses around me, (and I am a Jones…lol)
Randall,
All good if you ask me, too. 🙂
Keep putting that capital to work over there. I added a little to OHI today. Hoping this is just the start of something amazing.
Mo’ money, mo’ money, mo’ money!
Cheers.
FV,
Thanks!
It’ll be fun to see what that thing looks like in seven or eight years. Just doing my best to prove what’s possible when you stick with it. 🙂
Best regards.
Moonburnt,
I haven’t yet, but I also haven’t put a lot of time/effort into trying. I’m somewhat of an introvert, which makes this whole process much easier, but makes it more difficult to meet other people. I’ve made some great connections via the blog, but it’s not like anything organic has happened locally. I suspect that when I have more time, I’ll actively look for like-minded people through local meetups and what not.
It’s important to keep in mind, though, that this journey/process will probably isolate you a little bit. If most people are still stuck on the hamster wheel, you’ll naturally have less possible people you can develop meaningful connections with. But I don’t think it’d be extremely difficult to meet similar people if you really went after it.
Best of luck. 🙂
Cheers!
So another selloff today, that makes the short recovery of the last days look like a Dead-Cat-Bounce. Fair enough.
A couple of questions come up in my mind, these are not just for Jason, I’d like to read opinions from the readership of our host.
1) They kept us telling the FEDs are lowering interest rates and how QE floods the economy with money, forcing yield-searching folks into stocks. This is ongoing since years. Now china sucks and each and every stock tanks. Thats pretty good news as this allows me to invest in higher yielding stocks for a lower price. However, the question about how Norfolk Southern or Hershey is connected with the chinese economy should be allowed.
2)The last thought about 1) lets me think about why the heck they invented ETFs. It looks like the whole market gets sold, including United Pacific and Procter et al, closesly connected with china (NOT!). Losses throughout the board are easier to realize with masses selling ETFs.
‘A rising tide lifts all boats’. Chaps, we now experience the opposite.
3) Who is selling right now? Where is that money that has been gathered by these sales? Are the sellers the same people that told us that dividend yields are the new bond interests?
I reckon a shedload of money now sits at the side lines.
What are your thoughts? I’d like to see opinions from the readership.
You are doing a great job, Jason. I know you don’t like makros, but even Buffet enjoyed a tailwind with decreasing interest rates (=appreciating stocks) the last 30 years.
I’d like to mention that I’ll invest money every month throughout thick and thin.
Stef
Jason, you had written an article before (http://www.dividendmantra.com/2014/04/why-i-eventually-want-to-be-invested-in-50-companies-income-diversification/) that you wanted to stay invested in around 50 companies. Why did you choose to increase your number of holdings beyond that?
Thanks! – Chrissy, a long time lurker reader.
Chrissy,
Well, I was working my full-time job back then. And I wasn’t sure how much time I’d have to manage the portfolio, work 50-60 hours per week at the dealership, handle the growing traffic/readership the blog was taking on, still work out 3-4 times per week, and everything else life was throwing at me.
But I’ve realized over time that managing a large portfolio isn’t that time consuming:
http://www.dividendmantra.com/2014/11/is-managing-a-large-dividend-growth-stock-portfolio-time-consuming/
And now that I’ve left the dealership to focus on the blog and my writing on what has become a full-time basis, I’m not any more stretched for time than anyone else. But I was essentially working two jobs there for a bit.
As I noted in that article I linked above, I’m not going to arbitrarily or artificially limit the number of stocks in the portfolio. There are still plenty of great businesses out there I don’t own a slice of yet, but would like to. So I suspect I’ll rectify that over time. Time consumption insofar as it relates to managing 20 stocks or 60 stocks just isn’t much different, in my experience. Scales up pretty easily.
Hope that helps!
Cheers.
As weird as it sounds, I’m actually glad you didn’t invest during the crash in August. The average investor is not sitting by the computer or watching stocks all day in order to capitalize at a moments notice. If you can prove that financial independence can be done without constantly watching over your accounts accounts, it will be much more relatable for the average investor.
Conrad,
That’s a great point there. And that’s really something I’ve been trying to hammer home lately. Not only is the average investor not sitting around watching stock prices all day, but it’s completely and totally unnecessary. In fact, I’d argue that will do you more harm than good. This whole thing is about buying freedom to go about your life and create this lifestyle that’s totally customized out for you. It’s not about becoming obsessed over stock prices and what not.
Thanks for adding that!
Cheers.
Nice growing portfolio, DM! Market went down almost 10% and yours is holding up quite nicely. Nice buys also and would like to buy UTX, DIS, CAT at some point. Keep racing towards FI!
This is getting interesting with the volatility. Last week was fun in my opinion to see how low the markets could go. I was amazed to see it drop over a 1000 at the open last Monday. Alas by Thursday it made up the majority of Monday’s losses. I thought I missed out on all the action as I was busy reloading from a purchase earlier in the month. I was already considering stretching into my savings to purchase some more GILD before the ex div date of 9/14, but today’s overall downturn inspired me to take advantage of macro events at an absurdly low price in my opinion. Tomorrow morning I plan on making a huge purchase for some shares of this cash cow. Unfortunately this upcoming shot will provide a lot of kick and it will take about two months to get back on my feet as I replenish my savings and stock purchasing gun. Luckily for me I will be assured of $120 and $90 in dividends for September and October respectively, so it will be fun to count the “Guaranteed” money coming in as I wait to reload.
R2R,
It’s all about growing that dividend income and buying freedom one stock purchase and one dividend at a time. Cheaper stocks certainly help speed things along, so I’m very thankful for the recent activity.
Looks like you’ve been super busy over there. I don’t think there’s any universe that exists in which I could invest $6,000 per week for any extended period of time. That’s some serious income you’re working with, meaning that portfolio should build out very, very quickly. Keep it up!
Cheers.
I love this stuff. This article explains China in a politically correct form (read between the lines): http://www.bloomberg.com/news/articles/2015-08-27/china-said-to-sell-treasuries-as-dollars-needed-for-yuan-support
I have no love for the ETF market. Neither does John Bogle. They allow for fluctuations that are too modern for this old-school investor. I wouldn’t touch them. I understand why people do, I just won’t. I tend to encourage investing as a whole…so who am I to remark? ETFs are here and they are not going away. Volatility.
Q: Who is selling right now? A: The world.
TDM,
Ha! I hear you on getting back to your feet and brushing yourself off. I had to do the same after unloading some serious ammo last month. It was one of my most active months ever in terms of capital deployment, which is something I’m just super thankful for. Of course, I had to bag a small prize today – landed a few more OHI shares to keep this party going. 🙂
Have fun over there. Those dividends over the next couple months will go a long way toward helping you reload and get back to hunting. More volatility here over the near term could help even more.
Best wishes!
Every time I read something like this:
“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.”
I am reminded of how simple our goals should be as dividend growth investors and actually just as humans in general. Nicely put!
-Adam
Jason:
Have you ever considered selling one your holdings to take advantage of claiming a short term loss and then immediately put the proceeds into another one of your holdings. Since in a “correction “such as the present one’ it would be advantageous to record and claim short term losses on paper.you mention taxes are due.. If you reduce your tax liability you will have more money to invest.
The down market has created the environment to record the loss and at the same time you could use those BBs on an issue already in you portfolio
Some people don’t sell because they feel they are admitting defeat. Actually you are redeploying cash into another issue that may have a greater dividend payout and still have the same potential or greater for dividend growth as well as increase in share price . Once you have held an issue for one year , the tax advantage of this option is greatly reduced.
Keep up the good work
Yes, we had a lot of fun in August. Most of it was non-financial in nature. 🙂
I picked up a few stupidly discounted ETFs during the mini flash crash on the 24th. Also sold an emerging markets mutual fund for tax loss harvesting purposes (and rebalanced elsewhere to maintain roughly the same asset allocation in emerging markets). Otherwise it was more of “do nothing, sit back, collect dividends”.
We’re down $74k but that’s not a lot percentage wise. But it’s over 2 years of living expenses!
Times like these are great for continued buying if you have the cash. That’s for sure, and that’s how we got to early retirement so early – piling cash into the market in the ugly times of 2008-2009.
Jason:
Fantastic blog, I am very inspired and impressed with your dedication. Over the past year I have been paying off my home only cause I felt the market was too much in the black. However with this recent 2000 point drop off from this years highs I think its time to reallocate my funds towards some nice dividend payers! I recently picked up 50 shares of XOM at an average of 75 and, I currently have IBM in my sight & I am seriously considering grabbing 25 shares when I have the free capital. Any thoughts on IBM? I see you own it, any thoughts on averaging your cost down? Not much better company than Warren Buffett.
Regards,
SHM
Like Jason, I’m a bit of an introvert as well, but I find it rather difficult to talk to most people I know about money. Most of my family and all of my wife’s family are financially insecure, constantly trapping themselves in cycles of debt and binge spending that are typical of middle-class America. My mother is more financially secure, but he chosen real estate as her primary investment – whereas I’m with Jason’s opinion on that being a way to “buy yourself a job” – and the last thing I want is another job. Most of the people who surround me simply don’t understand equities and bonds. The few that do don’t tend to have a healthy long-term view, and so their feels about the market seem to depend upon their portfolio value. I’ve found Jason’s approach refreshing, which is why I frequent DM and other dividend growth blogs.
Adam,
Thanks so much.
I’ve found over time that being happy and making a life that works really well just isn’t that hard. Freedom has such a profound impact on one’s quality of life. And I know that because I’ve been on both sides of it.
Looks like you’re rocking along over there. Keep it up!!
Cheers.
Amegalo,
I don’t ever really consider something like that. Not in the sense of trading anyway. I am considering doing some tax-loss harvesting, but that wouldn’t really involve any trading or anything else. I would still end up with the same position in the end but just with a reduction of my capital gains on the year. NOV and BBL are prime candidates for that right now.
But it’s not about admitting defeat for me. If I like something at a higher price, I’m going to like it even more at a lower price, assuming similar fundamentals and room in the portfolio. So getting rid of something on the cheap that I bought at a more expensive price just to trade into something else makes no sense to me. That sounds like a good way to lose money over time.
Take care!
Justin,
You being down $74k is something I alluded to a while back. When the market drops by 5% or 10%, most of us retail investors are “losing” very little paper wealth. But think about investors with millions or billions of dollars already working on their behalf. You’re talking about swings of hundreds of thousands of dollars, or even millions of dollars in a day or two. So if you can’t handle seeing your wealth change by $10,000 or $20,000, you have to really think about whether you have the fortitude to stay in it for the long haul. And that’s because if you do it right, you’ll eventually be sitting on a million or two, and those swings will be even larger.
You obviously have the mental capacity for it. And you’re able to see volatility for what it is – opportunity. Which is why you retired so young. 🙂
Best regards.
Andrew,
Thanks so much. Glad you found the blog and like it thus far. 🙂
IBM is a great company. I’m not sure I’m going to average down, however, only because I plan on having only a 2.5% sector allocation to Information Technology over the long run. IBM is currently my largest position in that sector, so I’d probably sooner buy more MSFT or AAPL to round things out. But you never know. I think it’s notably cheap here. The other thing is that there are a lot of other opportunities out there and a lot of stocks that I haven’t bought yet (but would like to). Always more stocks than capital. A good problem to have. But a problem, nonetheless.
Have fun over there!
Cheers.
A well diversified portfolio will catch all the dips and spikes of the market, because it will be a reliable copy of that market.
Don’t you consider a “dividend etf” (if it exists) from a certain poin in the future?
By the way, do you have any ideia the %% of your portfolio that has been generated by dividends reinvestiment?
Allways glad to read from you!
Thanks
Enjoying the short lived pullback in the market as well. I initiated a position in Walmart and and Exxon Mobil and added to my position in T Row Price and Realty Income
Nuno,
Definitely. A properly diversified portfolio of high-quality companies will shadow the market, more or less. I notice my portfolio oscillates less, though. So when there’s a lot of volatility, it swings up less and swings down less.
As far as an ETF goes, I’ve been pretty adamant about my feelings there. I’m basically creating my own ETF that won’t require the paying of fees for the rest of my life. I’ll own what I want and won’t own what I don’t. And I’ll just collect those growing dividends with no middle-man. Works for me. 🙂
Thanks for dropping by!
Take care.
Derrick,
Nice! There are definitely some deals out there, and you’re scooping some of them up. That’s the way to use Mr. Market’s folly to your advantage. When he wants to sell high-quality assets for less than they’re worth, it makes sense to pounce on that as much as you can.
Keep it up!
Best wishes.
Thanks for the insight! I am at 4 companies with investments above 1k right now. My goal is to hit 10 in about a year combined with index fund investing.
Have a good labor day weekend!
Hi Jason, Love your site and I pick my stocks the dividend way. I’m up to 12 companies. I feel that I could be well diversified with perhaps 20.(certainly debatable)
But doesn’t this amount of diversification (65 companies) mean putting money into stocks that aren’t as good as the first ones chosen. Say in the energy sector your first few purchases are the ones with the best returns. Your 4th or fifth (or 8th) choices won’t be as good as the first picks.
I value your opinion and I see many others also going for the larger number of holdings. Please turn a critical eye on the idea that more money put on a few best returners in each sector is a good way to go.
Thanks 🙂
Freddy Green,
It’s really a personal call. You’ve got some investors out there who are quite concentrated. Then you have guys like Peter Lynch who did incredibly well with hundreds of stocks.
But I don’t prescribe to the notion that your tenth choice won’t be as good as your first choice. Sometimes you pick wrong. Sometimes companies don’t behave as expected – for better or worse. I invested in Disney very late in the game. Does that make it a worse pick than Procter & Gamble (one of my first investments)? I don’t think so. Totally different companies. Different investments. Both great business models. But I would have done much better (in terms of total return) by picking Disney earlier on. I picked up shares in General Dynamics well after I had a nice portfolio built. They’ve done incredibly well. Same goes for ITW. And some early picks haven’t panned out as well as I thought they would. It’s just silly to think that your top 10 picks will be the best stocks in the whole world. And maybe that’s why a lot of retail investors don’t do all that well. Ego gets the best of people. I think there are at least 100 really high-quality businesses out there that meet my needs. To artificially/arbitrarily limit myself would be dumb, in my opinion.
“…the idea that more money put on a few best returners in each sector is a good way to go.”
Sure, if you had a crystal ball and knew which stocks were going to offer the best return and best income/income growth, that would be great. But we don’t have crystal balls. The fewer stocks you buy, the more you’re going to hurt if you’re wrong. Diversification hedges bets. And that works pretty well when you don’t know the future.
In the end, as I’ve discussed ad nauseam, it’s about income diversification/sustainability/safety for me. And having 70 or 80 or 90 separate dividend income streams means I can easily deal with a dividend cut or two. Having just, say, 10 stocks means your freedom (once you’re living off of your dividend income) is much more fallible in that regard.
Hope that helps!
Cheers.
You make good points Jason. I was operating under the assumption that my first few picks in a given sector would be the best ones in that sector. As you point out, and I paraphrase,…any pick (1st or last picks) could prove to be poor performers. I’m already re thinking my 20 stock plan.
Thanks Again
I suspect that we had a big dip in our retirement accounts with all of the market craziness the last three weeks. The good news is that I am not checking or sweating it since I have seen this happen many times in the past and will certainly see it happen again.
We are in the market for the long haul. We are continuing our systematic investment in our employer retirement accounts through thick and thin. Dollar cost averaging baby – boring but effective! 🙂
PS: BTW – I do love dividends….
Bryan,
Dollar cost averaging is where it’s at. The more boring, the better. If growing your wealth and income is boring, then I suppose I’m just not a very exciting guy. 🙂
Keep it up over there. Every day is another opportunity to get that much closer to our goals and dreams.
Thanks for dropping by!
Cheers.
Hi Jason,
Thank you for these articles. I am on the same path as you and have a pretty similar BB guy. It’s fun to know there is another soul out there in this large universe doing similar things.
Look forward to reading more,
Best,
Vince Yeh
Vince,
The internet is wonderful. It’s allowed many of us to connect with like-minded people, which is something that’s difficult in our day-to-day lives. 🙂
Definitely a lot of us out there. We just don’t pop out at you in society. We’re there, though.
Stay in touch!
Cheers.
Mate , Good to be back here after a few months , been really busy in office work.
Your portfolio has held up quite well in current volatility. That’s the beauty of holding solid dividend paying stocks. ☺
Well , over here I m down almost 10-12% but have been buying even more aggressively.
Also recently I have opened a new brokerage account to cater to small “not researched” stocks.
Going by the feel, it would require a paradigm shift from my current style of investing.
Lastly , I read somewhere that, out of world’s 50 most researched stocks , 48 are Indian , remaining 2 being Apple and Intel !
PS: As I write this , there is a discussion going on CNBC India regarding what Yellen gonna do tonite.And they have brought in an astrologer as one of the panelists ! ! But Unfortunately , both central bankers and astrologers are wrong most of the time
2016 has turned out to be a rough one with Oil still down! Better to leave room on the table for better opportunity! Let the games continue @ http://www.dividendmiracle.com