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.
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, freedom, and options.
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.
I purchased 1 share of Broadcom Inc. (AVGO) on 12/7/18 for $229.81 per share.
Broadcom Inc. is a leading designer, developer, and supplier of analog and digital semiconductor devices.
I’ve discussed Broadcom rather extensively over the last four months, so I’ll keep it short here.
As previously noted, my plan has been to acquire one share per month until the position is full. I started building a position in Broadcom back in September. This is the fourth month in a row in which I’ve bought AVGO.
I could see myself eventually getting up to 10 shares. It would be less than 1% of the portfolio. It’s a fine, fine business. One of my best ideas at the moment. But the balance sheet, short dividend growth history, and acquisitive behavior limits how heavy I can go with Broadcom. That could change down the road, though.
That said, the dividend increase they announced in December was incredible!
This purchase added $10.60 in annual dividend income.
I purchased 5 shares of The Kraft Heinz Co. (KHC) on 12/18/18 for $46.66 per share.
The Kraft Heinz Co. is one of the world’s largest consumer packaged food and beverage companies.
I explained my rationale for investing in Kraft Heinz, alongside Warren Buffett, in November’s FIRE Fund update. So I won’t go into that again.
The stock market in general has been particularly volatile in December. This stock’s price has dropped rather precipitously, which could be said for most stocks. I saw an opportunity to average down in a big way on a small position.
That said, I never intended for this to be a large position. I noted my intent back in November. I could pick up another five shares or so, but that would be it. Just as well, I’d be happy if this were all there was for my investment in Kraft Heinz. I like a lot of things about the business (legacy brands, shelf space, etc.). The valuation and yield are appealing. But the debt load and lack of growth are concerning.
This purchase added $12.50 in annual dividend income.
I purchased 5 shares of Hanesbrands Inc. (HBI) on 12/24/18 for $11.88 per share.
Hanesbrands Inc. is an apparel marketer and manufacturer, with a portfolio of apparel brands across t-shirts, innerwear, casualwear, activewear, socks, and hosiery.
I discussed my reasoning for investing in Hanesbrands back in June, which was the last time I bought shares in this apparel company.
I’ve honestly been surprised by the valuation compression. The stock is priced almost as if the business is completely falling apart. But the financial statements don’t show anything of the sort. It’s puzzling, even in the face of broader market volatility.
The valuation is at a jaw-dropping level. The P/CF ratio is less than 1/3 its three-year average. And the stock’s yield, now at over 5%, is more than three times higher than its five-year average. I don’t see it as 1/3 the business it’s been as of late. The balance sheet is a bit wobbly, but it’s not like consumers aren’t buying their clothing.
I liked it at $20. Liked it even more below $17. I obviously love it below $12, but this was another business that I never saw myself going too heavy into. So I don’t anticipate buying too much more moving forward.
This purchase added $3.00 in annual dividend income.
I purchased 5 shares of British American Tobacco PLC (ADR) (BTI) on 12/28/18 for $32.43 per share.
British American Tobacco PLC is a global consumer goods company that provides tobacco and nicotine products to adult consumers worldwide. They’re one of world’s largest such companies.
I wasn’t planning on buying more shares after adding to my position in November, but the valuation and yield are just too compelling to pass up.
That said, I’m a bit heavy on tobacco at the portfolio-wide level. It’s not my preference to add too much more to my positions in this industry. Altria Group Inc. (MO) might have some space for an addition, but this will definitely be the last time I buy BTI stock.
This purchase added $12.80 in annual dividend income.
There were no sales since the last update.
W.P. Carey Inc. (WPC) announced a 0.5% increase in its dividend, upping the quarterly dividend from $1.025 to $1.03. This added $1.60 in annual dividend income.
Broadcom Inc. (AVGO) announced a 51.4% increase in its dividend, upping the quarterly dividend from $1.75 to $2.65. This added $10.80 in annual dividend income.
C.H. Robinson Worldwide, Inc. (CHRW) announced an 8.7% increase in its dividend, upping the quarterly dividend from $0.46 to $0.50. This added $4.00 in annual dividend income.
WEC Energy Group Inc. (WEC) announced a 6.8% increase in its dividend, upping the quarterly dividend from $0.5525 to $0.59. This added $3.75 in annual dividend income.
Amgen, Inc. (AMGN) announced a 9.8% increase in its dividend, upping the quarterly dividend from $1.32 to $1.45. This added $5.20 in annual dividend income.
Ventas, Inc. (VTR) announced a 0.3% increase in its dividend, upping the quarterly dividend from $0.79 to $0.7925. This added $0.60 in annual dividend income.
Enbridge Inc. (ENB) announced a 10% increase in its dividend, upping the quarterly dividend from CAD 0.671 to CAD 0.738. This added $15.00 in annual dividend income.
Realty Income Corp. (O) announced a 0.2% increase in its dividend, upping the monthly dividend from $0.2205 to $0.221. This added $0.57 in annual dividend income.
CenterPoint Energy, Inc. (CNP) announced a 3.6% increase in its dividend, upping the quarterly dividend from $0.2775 to $0.2875. This added $3.60 in annual dividend income.
AT&T Inc. (T) announced a 2% increase in its dividend, upping the quarterly dividend from $0.50 to $0.51. This added $8.00 in annual dividend income.
Pfizer Inc. (PFE) announced a 5.9% increase in its dividend, upping the quarterly dividend from $0.34 to $0.36. This added $4.80 in annual dividend income.
Abbott Laboratories (ABT) announced a 14.3% increase in its dividend, upping the quarterly dividend from $0.28 to $0.32. This added $5.60 in annual dividend income.
Dominion Resources, Inc. (D) announced a 9.9% increase in its dividend, upping the quarterly dividend from $0.835 to $0.9175. This added $9.90 in annual dividend income.
There are 115 companies in the Fund. That’s unchanged since the last update.
The Fund is now expected to generate a total of $13,419.96 in annual dividend income over the next 12 months. That’s an increase of 0.8%, or $104.12, over the prior update’s annual expectation of $13,315.84.
A fantastic tool for tracking your portfolio, progress, and performance is Personal Capital.
Check out that huge list of dividend increases!
High-quality businesses selling more high-quality products and/or services, resulting in high-quality dividend raises.
What a fantastic way to begin 2019, or a fantastic way to end 2018. Depends on your perspective. I’m a glass-half-full, optimistic kind of guy. So I’m always looking forward.
Either way, the FIRE Fund is firing on all cylinders.
This allows my life to fire on all cylinders. My life is on fire right now precisely because it’s on FIRE. It’s as simple as that.
This growing dividend income underpins everything I do. It sets everything up for me. I’m free to go about waking up when I want and pursuing the passions and projects that make sense to me.
Ordinarily, that’s next to impossible for most people. It’s all about going to the job and chasing that paycheck for them. It’s grind it out. Race the other rats. Gotta try to win a rat race that nobody wins. And even if you could win, you’d still be a rat.
I’m truly grateful that I’m not in that position.
I didn’t put too much capital to work in December because I was honestly just busy with other elements of life.
I also had to settle some visa stuff so that I can stay in the Land of Smiles. I’m smiling over that.
Fortunately, I didn’t have to add much capital. That’s because the dividend growth snowball that I started rolling years ago has now built up its own momentum.
It’s almost like watching a kid grow up and do stuff without you holding their hand. Maybe a little sad. But you’re proud. And you also breathe a sigh of relief.
The snowball rolled like crazy in December.
For perspective on that, the $73.42 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 $2,097 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.
It was once a hell of a goal to be able to invest more than $2,000 in a single month. Yet I was able to accomplish that same feat in December without lifting a finger. Money working for me? That works for me!
The Fund obviously decreased in market value quite a bit over the course of December. This reflects broader market volatility. But while others are worried about stock prices mired “in red”, I’m happy because my dividends are “in the green”.
Looking forward, I suspect that January will be like most months in terms of what I do with the portfolio.
That is to say, I’ll look to add $500 to $1,000 in fresh capital. I’ll put that work in high-quality dividend growth stocks trading hands at appealing valuations. It’s a formula that works really well. If it’s not broke, don’t fix it.
I’d like to add to my stake in Texas Instruments Incorporated (TXN). A phenomenal business.
I’ll almost certainly pick up another share of AVGO, unless the stock suddenly shoots up significantly.
Beyond that, I’ll just look at opportunities as they come. Investing isn’t the overwhelming priority it once was for me, but I still enjoy the hunt. Warren Buffett likes to go hunting with an elephant gun. I’ve always been quite pleased with my little BB gun.
I’m greatly looking forward to 2019. This will be the second full calendar year in which I’ll be living abroad as an early retiree expat. Life just keeps getting better over here in Thailand. I’m very excited about the experiences that haven’t yet unfolded.
More people to meet, more food to try, more places to see, more investments to make, more articles to write.
I wish us all a wonderful year ahead!
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!