The FIRE Fund is my real-life and real-money dividend growth stock portfolio.
I call it that because the portfolio allowed me to reach financial independence and retire early (FIRE).
This six-figure collection of some of the best businesses in the world is generating the five-figure and growing passive dividend income I need to sustain myself in life and cover my personal basic expenses.
The Fund provides me an opportunity to live a blissful job-free existence that promotes time over money, passions over paychecks, and value over prices.
I’ll below go over any and all transactions from the preceding month, covering any buys and/or sells that occurred since the last update.
You’ll see exact transactions (including dates and prices).
And I’ll quickly discuss some of the rationale behind each respective transaction.
Keep in mind, however, that these monthly updates are just snapshots in time. These updates are furthermore simply a peek at what the maintaining of a dividend growth stock portfolio post-FIRE looks like, as I’m no longer aggressively buying stocks so that I can achieve FIRE.
Stock purchasing is now more or less a function of the pure enjoyment of investing as a hobby and passion (rather than a function of becoming financially independent as fast as possible), but the ongoing casual investing of fresh capital does add to my passive income, options, and philanthropic firepower.
Moreover, the actual market value of the FIRE Fund (which is constantly oscillating) means very little in the grand scheme of things; it’s the dividend income the Fund generates that actually unlocks financial freedom for me.
To that point, I’ll also go over any dividend increases that were announced since the last update, as well as how that affects the Fund’s expected annual dividend income over the next 12 months.
Purchases
I purchased 5 shares of CVS Health Corp. (CVS) on 3/15/19 for $55.49 per share.
CVS Health Corp. is a pharmacy healthcare provider that operates one of the largest pharmacy retail chains in the US, with more than 9,800 locations across the US and the District of Columbia, Puerto Rico, and Brazil. It’s also one of the largest pharmacy benefit managers in the US, with more than 93 million PBM plan members. With the recent acquisition of Aetna Inc. now completed, they’re also one of the largest managed healthcare companies in the United States.
This is such an interesting stock here.
I analyzed the stock about a year ago. The fundamentals, at the time, were pretty outstanding across the board. Low payout ratio, appealing yield, double-digit long-term dividend growth, good balance sheet, strong top-line and bottom-line growth. It was almost a prototypical dividend growth stock.
Well, what a difference a year can make.
The company completed their $78 billion (including debt assumption) acquisition of Aetna, which came with some big benefits and drawbacks.
First, the combined company is now vertically integrated across the healthcare chain. It’s a massive player in a massive system where scale matters. And there’s no other company that provides this kind of top-to-bottom service. There’s purchasing power, scale, and efficiency here that is practically unrivaled.
However, there’s a lot of debt now, since most of the Aetna acquisition was funded with new debt. In addition, CVS Health Corp. took on Aetna’s debt.
The balance sheet is now stressed, the dividend growth is on pause, and there are serious questions regarding how Aetna will play out. They’ve also exposed themselves to a sizable new risk vis-à-vis the ongoing discussions about nationalizing US healthcare.
That said, there’s simultaneously been a major drop in valuation here that can’t be ignored.
The stock was over $100/share as recently as the spring of 2016 – without Aetna.
It’s now well under $60/share – with Aetna.
Every basic valuation metric I look at is substantially lower than its respective recent historical average.
In fact, the market cap of CVS Health Corp., at less than $70 billion, is below what the they valued the entirety of just Aetna at. Now, one might not totally agree with that Aetna valuation. And there’s a lot of debt here that wasn’t present before. But there’s also a lot of cash flow coming in that wasn’t there before.
I’ve made a lot of money by buying stocks when they were unpopular. This is one of the most unpopular stocks in the market right now. We’ll see how it goes.
This purchase added $10.00 in annual dividend income.
I purchased 5 shares of The GEO Group, Inc. (GEO) on 3/18/19 for $20.37 per share. I purchased another 5 shares of GEO on 3/12/19 for $19.74 per share. Then I purchased another 5 shares of GEO on 3/18/19 for $19.12 per share. I purchased another 5 shares on 3/20/19 for $18.91 per share. Finally, I purchased 5 more shares on 3/27/18 for $18.34 per share.
The GEO Group, Inc. is a leading provider of diversified correctional, detention, and residential treatment services to various government agencies around the world.
I talked quite a bit about this holding in last month’s update, so I won’t bother repeating myself.
This was simply an exciting opportunity to average down on a small position. Although I plan to keep this a very small position, I’m very happy to be able to rapidly build it up and complete it at a lower price than it was just last month. I have no plans to add to this position in the future.
These purchases added $48.00 in annual dividend income.
I purchased 1 share of The Home Depot Inc. (HD) on 3/13/19 for $182.59 per share.
The Home Depot Inc. is the world’s largest home improvement retailer, operating almost 2,300 stores across the US, Canada, and Mexico.
This is a really high-quality business. The fundamentals pretty much across the board are fantastic.
Earnings per share compounded at an annual rate of 22.47% over the last decade, which is just blistering. They’ve reduced the outstanding share count by almost 30% over that time frame. Margins are way up. Everything is clicking here.
Meanwhile, the long-term dividend growth track record is pretty excellent. While they’ve only increased the dividend for ten consecutive years, that’s only as short as it is because the company chose to keep the dividend static during the Great Recession. It’s understandable considering the scope of the financial crisis. But the company has paid a dividend since 1987 and they had a dividend growth streak of more than 20 consecutive years before the 2008 freeze. They’ve certainly made up for time, though – the 10-year dividend growth rate is 25%.
Speaking of which, they just increased the dividend by 32%! Along with that increase, they announced a new $15 billion stock repurchase plan.
The stock yields approximately 3% after that big dividend raise, which was enough to push me over the edge and initiate a position. I would like to build up a decent-sized position in this retailer, so I’m hoping it stays at this level (or lower).
Now, this isn’t a cheap stock. But I think it’s a high-quality dividend growth stock trading at a slight discount. At worst, it’s a wonderful business trading at a fair price.
The P/E ratio, at 18.77, is substantially lower than the stock’s own five-year average P/E ratio of 23.0. The P/CF ratio of 15.9 is also quite a bit lower than its own three-year average of 17.9. The current yield, near 3.0%, is 100 basis points higher than its five-year average, although this is partly skewed by that recent raise.
While I think a lower multiple makes sense based on slowing growth concerns and where we’re at in the cycle, I feel great about entering a position here after the stock has dropped about 14% since where it was at last September.
The only thing I don’t feel great about is the fact that it took me so long to invest in this company. This is the 117th company in the Fund, which just goes to show how many amazing businesses there are out there. I’ve slowed way down with the investing, but it’s knowing that there are still quality opportunities out there like this that keep the passion alive.
This purchase added $5.44 in annual dividend income.
Sales
There were no sales since the last update.
Dividend Increases
General Dynamics Corporation (GD) announced a 9.7% increase in its dividend, upping the quarterly dividend from $0.93 to $1.02. This added $7.20 in annual dividend income.
Armanino Foods of Dinstinction Inc. (AMNF) announced a 11.1% increase in its dividend, upping the quarterly dividend from $0.0225 to $0.0250. This added $13.50 in annual dividend income.
Realty Income Corp. (O) announced a 0.2% increase in its dividend, upping the monthly dividend from $0.2255 to $0.226. This added $0.57 in annual dividend income.
W.P. Carey Inc. (WPC) announced a 0.2% increase in its dividend, upping the quarterly dividend from $1.03 to $1.032. This added $0.64 in annual dividend income.
Colgate-Palmolive Company (CL) announced a 2.4% increase in its dividend, upping the quarterly dividend from $0.42 to $0.43. This added $2.00 in annual dividend income.
Williams-Sonoma, Inc. (WSM) announced an 11.6% increase in its dividend, upping the quarterly dividend from $0.43 to $0.48. This added $5.00 in annual dividend income.
Raytheon Company (RTN) announced an 8.6% increase in its dividend, upping the quarterly dividend from $0.8675 to $0.9425. This added $7.50 in annual dividend income.
Bank OZK (OZK) announced a 4.5% increase in its dividend, upping the quarterly dividend from $0.22 to $0.23. This added $1.20 in annual dividend income.
FIRE Fund
The FIRE Fund is now valued at $398,730.25. That’s a 3.2% increase from the last reported market value of $386,263.49.
There are 117 companies in the Fund. That’s an increase since last month due to the initiation of a position in The Home Depot Inc.
The Fund is now expected to generate a total of $13,753.25 in annual dividend income over the next 12 months. That’s an increase of 0.7%, or $101.05, over the prior update’s annual expectation of $13,652.20.
A fantastic tool for tracking your portfolio, progress, and performance is Personal Capital.
Conclusion
Another phenomenal month, in my view.
The Fund continues to fire on all cylinders, more or less.
Now, with over 100 different companies in there, not every single company is operating at 100% efficiency, 100% of the time. Some companies are doing better than others. That’s one reason I’m diversified. Overall, though, I’m very happy with how these businesses, on average, are doing.
It was a relatively light month for dividend increases. This was expected. It’s a typical March. A small number of companies in the Fund usually announce increases in March.
But the dividend increases that did come through were pretty big. Other than Colgate’s increase, I couldn’t be more pleased. It’s pretty tough to be disappointed with getting multiple pay raises for doing absolutely nothing. I wouldn’t ever call myself lazy, but I’ve never been unhappy with the idea of collecting more money for no extra effort on my part.
I was at the top end of my average monthly capital outlay. Plus, I put a large percentage of that capital to work in a slightly speculative stock (GEO) that sports an unusually high yield in comparison to most of the stocks I typically buy.
As such, this is one of the rare months in which the reported increase in the Fund’s expected annual dividend income came more from new purchases than organic dividend growth (via dividend increases from holdings).
I suspect this pendulum will swing back into the favor of organic growth next month, however, as capital outlay, dividend raises, and the yield I’m getting from new stock purchases all return to their respective long-term averages.
Still, the dividend growth snowball rolled plenty fast and far this month.
Let’s put that dividend growth in perspective.
The $37.61 increase in my annual dividend income that came about by way of the organic dividend increases announced by my holdings this past month is analogous to investing $1,075 in fresh capital at a 3.5% yield (the average portfolio yield) – except I invested exactly $0 to achieve that increase in passive dividend income.
Amazing stuff here.
Even with a light month on the dividend growth front, I saw my annual dividend income increase as if I invested over $1,000 of my hard-earned money. I remember struggling to invest $1,000 per month back when I first started out. That’s a lot of money to put away.
Looking toward April, it’s business as usual.
I’ll aim to invest $500 to $1,000 in fresh capital, which is my current target for post-FIRE investing activities. The Fund is pretty much in “maintenance mode” from here on out.
It’s not as easy to find values as it was just a few months ago. But it’s not impossible. And I’ve never been against paying a fair price for a great business.
I’d like to add to my position in Texas Instruments Inc. (TXN) sooner rather than later.
I still think United Parcel Service, Inc. (UPS) is attractively valued, although I do already have a good-sized position there.
CVS, as noted earlier, is deep into value territory. But I don’t see myself buying too much more due to the size of that position.
Retail continues to be interesting, too. Target Corporation (TGT) shot up very quickly on me right about the time I was going to add to my position, so I shifted over to looking at HD. I see myself buying more HD very soon.
Many financial institutions across the board look appealing. I may decide to be opportunistic there.
I’m excited to live out another month in the life of my dreams. FIRE is absolutely, without a doubt, worth every ounce of effort and so-called “sacrifice”.
I honestly couldn’t imagine living any other way. Having the freedom to live life totally on my terms is a huge gift. Owning my time is the greatest luxury of all.
Let’s all continue to make our dreams come true!
As always, I’ll publish stock purchases in real-time over at Twitter and Facebook. So make sure to follow me there (where I also share numerous other updates about my life as a dividend expat).
Full disclosure: I’m long all aforementioned stocks.
How was your month? Are your investments performing to your expectations?
Thanks for reading.
Image courtesy of: imgflip and Warner Bros. Pictures.
P.S. If you’re also aiming to build a dividend growth stock portfolio and the necessary dividend income to become FIRE, make sure to check out some amazing resources that helped me reach financial freedom at 33!
hello, always read a lot here and also have a lot of shares as you in my portfolio.
I also have the geo group and am also considering a small position corecivic to buy me.
Greetings from Germany:-)
Tiffy,
Thanks for your readership. Happy to be a fellow GEO shareholder. 🙂
Best regards.
Glad to see your portfolio is continuing to work for you. I also initiated a position in Home Depot about two weeks ago, and hope to add more. Great minds, Jason, great minds…
PP,
Sounds like we’re on the same page. A lot to like about HD. Valuation isn’t deep into value territory, but it’s a phenomenal business. Hope to be able to accumulate shares over the coming months.
Best wishes.
March was a great dividend month for me. Since I did a significant reallocation Q2 of 2018, my monthly year over year numbers are skewed. However, now that Q1 is in the books, I can see that my dividend income for Q1 is up over 22% vs last year. That’s exciting!
I sold FB and initiated positions in GEO, PPL, EMN and BIF. Still sitting on some cash waiting for market pull back but that sure didn’t happen in Q1.
sfmitch,
Great stuff. Sounds like you’re off to a great start this year.
Selling FB (that doesn’t pay a dividend) and moving into stocks that pay sizable dividends will surely continue to move that needle higher for you. 🙂
Cheers!
I know you don’t care about this number much, but $398,730.25…. Wow!
Rick,
It’s a very big number, especially for my background. Could have never imagined something like this when I was growing up brutally poor in Detroit.
I don’t have much of an impact on it any longer, though. Even just a 1% swing in the portfolio’s value is more than I invest per month. Fortunately, it’s not my focus. 🙂
Best regards.
Good day Jason
just ready your March update and I have to say congrats on a fine month. I enjoyed seeing your organic annual dividend increases of $37.61 without any fresh capital having to be put to work. No doubt this is some really good stuff more money without having to work for it. I have to agree with you this gives you more options to meet any inflation, do more traveling, help out your girlfriend OH, be philanthropic etc. I am glad to see FIRE is helping you enjoy your life Jason, 2 thumbs up.
Cheers
Michael,
Thanks for the support. Much appreciated.
I honestly couldn’t be happier. It’s an amazing lifestyle over here. 🙂
Hope you also had a great March!
Best wishes.
Hey Jason! The portfolio size and the number of companies you own is mind-blowing! A 117 amazing companies working for you, providing you and your better half 🙂 a living in Thai. Very happy for you that you reached the level you’re at now.
German,
Thank you very much. Very kind of you. 🙂
It’s a dream. It really is. I’m so fortunate. I still can’t believe it sometimes!
The cool thing about all of this is, it’s possible for anyone. I do my best to hammer that home and inspire others to make their dreams come true. Life is too short to do it any other way.
Cheers!
“I’ll aim to invest $500 to $1,000 in fresh capital” == What is the source for this income?
SD,
I note the various income sources in every monthly expense report. Here’s the most recent:
https://www.mrfreeat33.com/expenses-for-february-2019/
Cheers.
This is phenomenal and a great example of good research. If you get a chance can you suggest on BIP
Vijay,
I don’t track BIP, so I can’t say much. What I can say, though, is that the entire Brookfield family of assets is enviable. I have looked at BAM before, and I really liked what I saw there. Should have bought a while ago. Flatt is about as sharp as they come. 🙂
Best regards.
Hi Jason,
It’s very impressive that you have amassed such astounding levels of wealth in a relatively short period of time. As you mentioned earlier it’s akin to amassing “lottery money”. And the freedom this provides is far better than the temporary gratification from any short term splurges.
Congratulations!!!
-Mike
Mike,
Thanks, man. It’s been incredible. Totally unbelievable at times. I’m so grateful for all of this.
Your comment about gratification is interesting. I’ve actually come to a point in my life where I don’t even desire most things in life. It’s not a challenge to live on so little any longer in part because I genuinely desire so little. Of course, owning my time is a luxury I can’t do without. And that is, unfortunately, quite expensive!
Hope all is well. 🙂
Best wishes.
sweet Jason.
just living the dream and inspiring others. Thats what its all about man! congrats
nice buys this month and organic growth from those raises.
keep it up man
cheers
CPI,
Inspiring others to make their dreams come true is part of my dream. I’m doing my best to make the most of this huge opportunity. I’d be really disappointed in myself if I let it all go to waste.
Thanks for dropping by!
Best regards.
Jason, nice pickups during the month and I noted you added more CVS this month already as well. I just started a position in CVS myself last week and just added to it today as well. I wasn’t keen on the Aetna acquisition when it was announced, however, with the valuation of CVS where it now, it is very compelling despite the execution (Aetna inegration) and regulatory risk associated with this company.
The point you emphasize regarding the current valuation of CVS being > than the Aetna purchase is dead on. I’ll take two companies for the price of one, are you kidding me! Dividend is well covered while still having ample FCF to pay down debt. For similar reason I began acquiring shares of BAYRY late last year, and still continue to do so, the combined company after the acquisition of Monsanto is valued at less just under the purchase price of Monsanto at $63B. Like CVS there are some near term risk associated with BAYRY, like the numerous lawsuit regarding glyphosate (weed killer). Despite the lack of any definitive researching linking the chemical to cancer, runaway juries in CA continue to award plaintiffs huge sums of money. I am willing to assume the risk and collect the hefty dividend while things sort themselves out – hopefully in my favor 🙂
Best of luck!
PIV,
The pharmacy business appears to be facing an existential threat. CVS then goes out and makes a big move to protect/improve the business model, yet the move it made is being valued at, essentially, nothing. It’s very odd. We’ll see how it turns out here. Thus far, they’ve been very good with these big moves. Caremark comes to mind. But any kind of large-scale change to US healthcare will put the likes of CVS squarely in the cross hairs.
Cheers!
Jason,
Awesome month and nice work averaging down. Agreed on the dividend increase front, April is here and you & I both know this is a relatively heavy increase month. Excited and looking forward to what they all decide to do.
Lastly, couldn’t agree more on CVS, behemoth is hard not to look at.
Keep on adding when you can, it’s great seeing that forward income grow J!
-Lanny
Lanny,
Yeah, that GEO work was pretty fun. It was just one solid average down after another. Most people would seem to think that I’d prefer stock prices to go up. It’s actually the total opposite.
Sounds like a lot of people had a great March, including you guys. Really happy about that. It’s awesome to see what’s become of the community over the years. 🙂
Thanks for dropping by!
Best wishes.
How good! Same as investing another 1000 of fresh capital. How powerful dividend growth investing is. Great stuff.
BHL,
It’s incredible stuff. I’m very talented at staying out of the way of a giant snowball that’s growing ever-larger by the day. 🙂
Cheers!
Haha. Be careful of that ever-increasing snowball! Great stuff mate.
Hi Jason,
have you ever thought about who will inherit this capital stocks?
Since you are not married and you dont have children, is it possible that you adoptive parents could be one day the first in line to receive this fortune, in the bad case something bad happen to you? or your sister? cousins? or the bank/broker will take back the stocks if nobody claim?
since you didnt haven good experience with your family, i would like to know if you have a plan about this…
praya,
That’s a great question.
I handle this through a TOD (Transfer on Death), but there are a number of ways you can go about it. I’m a fan of “giving while living”, so I’ll do my best to thread the needle and leave very little leftover when I die. Hard to be too exact, however, because we don’t know how long we’ll live.
Best wishes.
Just came here to say 400k is on the way!! And I know I know, “I don’t concern myself with the total value only the dividends it kicks off” blah blah blah lol, you know every now and then it’s cool to click over another 100k milestone. Don’t lie!
Anonymous,
Haha!
Yeah, it’s definitely cool. I mean, I suppose I just think of it in terms of more philanthropic firepower down the road. That’s something I’m excited about.
But the portfolio value doesn’t have anything to do with my day-to-day life because I don’t sell stocks or live off of capital gain. So it basically exists out there in the ether for me. It’s only a number.
However, clicking over every additional $1,000 per year or $100 per month in dividend income is thrilling for me. That is something I can relate to a lot more because it has a greater impact on my daily life. Speaking of which, I’m getting excited about hitting $14,000/year pretty soon. Then it’ll be $14,400/year, which is an even $1,200/month. I’m getting close to $15,000/year in dividend income, which was my original annual dividend income goal when I envisaged all of this.
Best regards.
Hi Jason another great article and great month as well. I picked up AMNF long ago when you had the other site paying just a few dollars a share for it. Im glad I jumped in on that great little company. I dont usually buy small caps but I could nof resist that one 🙂
I never really tracked my dividend growth before but I started this year in January. It gets skewed becauae I reinvest 20% of my dividend income and I have started adding new companies as well. Many of the new adds ( not all ) have been RIETS I think they have been battered down due to raising intrest rates. Some are up in the 7% + yield range and that piles up fast. Its amazing to see the increase month over month.
I enjoy reading your posts even though I retired early back in 2004. Keeps me excited to continue into the future. I also enjoy seeing others here working towards their own goals.
Thanks again. Stay inspired 🙂
Bob
Bob,
Hey, I’m happy be a fellow AMNF shareholder! 🙂
I’m not sure if one ever loses the passion for investing. I don’t think I will. I mean, I quit my job five years ago. But I feel just as good about investing as I ever have. The only difference now is that it’s not this overwhelming priority in my life to buy stocks and build up the passive/dividend income, because I’ve already achieved my overarching financial goal. I’ve been able to strike a healthy balance now, which is awesome. And living in Thailand reinforces that balance. I feel like a lot of Americans are unhealthily obsessed with money, which is kind of gross. That was one thing that drove me away.
Thanks for dropping by!
Cheers.
Hi Jason,
I know when you were back in US and you were working to get to Financial Independence your expenses were around 1200$/month. How much would that exact lifestyle cost in Chiang Mai?
Cheers
Mike,
Living in a very cost-conscious way, to the point of being a miser, would probably only run about $300 or $400 per month here. That’s assuming that same lifestyle I used to live, which would include splitting an older place on the outskirts of a small city with a significant other (cutting rent in half), eating cheaply, and generally watching every penny. I could get rent alone down to, probably, $50/month like that.
I’ve noted before that my purchasing power has roughly tripled, so the numbers shake out:
https://www.mrfreeat33.com/my-single-greatest-financial-investment-which-returned-me-13000-almost-instantly-made-me-a-millionaire-overnight/
Of course, I wouldn’t want to live like that over here. Not for very long, anyway. Moreover, the reasons I continue to stay here don’t really have much to do with money. It’s just a culture and lifestyle preference at this point.
Best regards.
Thanks for sharing your update Jason. I believe CVS to be one of the most undervalued companies in the market. As you point out though, it doesn’t come without risks. That’s why the market has beaten it up.
I still think It’s amazing you can live off your dividends, doing what you like to do, and still have money to continue investing. I don’t get to stop by as often but every time I do I find some motivation.
Keep up the good work
Brent,
Agreed on CVS. One of the most compelling long-term opportunities out there. That valuation is nuts, but there are definitely some existential questions here.
Appreciate the support. I still think it’s amazing, too. I wasn’t actually planning on continuing to invest post-FIRE. So it’s great that I can still spend time with this particular passion, which obviously adds to my philanthropic firepower down the road. I continue to work really hard on the things I love, which has turned out pretty well for me. I’m happy. 🙂
Glad you find motivation in the journey and content. Motivating and inspiring others is why I continue to write.
Best regards!