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) at just 33 years old.
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.
How and why I’ve saved and invested my way to FIRE at such a young age has been covered in my two best-selling books: The Dividend Mantra Way and 5 Steps To Retire In 5 Years (also available in paperback).
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.
I purchased 1 share of Eastman Chemical Company (EMN) on 6/4/19 for $69.91 per share.
Eastman Chemical Company is a global specialty chemical company that manufactures and markets a wide range of advanced materials, chemicals, and fibers which are used in various consumer and industrial products.
I discussed the investment thesis for Eastman Chemical in June’s portfolio update, which is when I built the bulk of the position.
The valuation was such that I thought it was opportunistic to round up to an even 10 shares.
I’m contemplating going a little heavier here, if the stock drops back down closer to $70. But I’d also be happy keeping it where it is. As I noted last month, I see it as more of ancillary position.
This purchase added $2.48 in annual dividend income.
I purchased 3 shares of WestRock Company (WRK) on 6/4/19 for $34.24 per share. I purchased another 2 shares on 6/26/19 for $34.72 per share.
WestRock Company is a leading integrated manufacturer of various corrugated and consumer packaging materials.
I built my position in WestRock Company back in April. And I noted in May’s portfolio update that I had no plans to add to the position.
However, the valuation at various points throughout June became silly. Grabbing this stock below $35/share was a no-brainer that I couldn’t pass up. So I upped the position by 25%, which is past what I initially had in mind. But I would prefer to cap it here.
These purchases added $9.10 in annual dividend income.
I purchased 5 shares of KeyCorp (KEY) on 6/6/19 for $16.83 per share. I purchased another 5 shares on 6/6/19 for $16.75 per share. Then I added another 5 shares on 6/19/19 for $17.04 per share.
KeyCorp is a bank holding company that, through its subsidiaries, provides a range of retail and commercial financial services.
This is a new position for the Fund.
This is an undervalued high-quality dividend growth stock that I highlighted in early June. I liked the business model, fundamentals, and valuation enough to go ahead and initiate a position in the regional bank.
I don’t have many smaller bank holdings. Most of my exposure to local/regional banking is in Texas, while KeyCorp’s primary markets are Ohio and New York. So there’s some geographical diversification here.
I plan to add to this position in the near future.
These purchases added $10.20 in annual dividend income.
I purchased 5 shares of Leggett & Platt, Inc. (LEG) on 6/11/19 for $37.92 per share.
Leggett & Platt, Inc. is a diversified manufacturing company that conceives, designs, and produces a variety of products that can be found in homes and automobiles.
This is a new position for the Fund.
Almost 10 years into investing, with more than 100 different companies in the Fund, and I’m just now coming around to buying stock in a company with one of the longest dividend growth track records in existence. Just goes to show you how many quality businesses are out there.
Getting back to that dividend, Leggett & Platt has increased its dividend 48 consecutive years. Even for manufacturers, that’s a pretty amazing number.
This company isn’t going to knock your socks off with growth. Revenue is up a bit less than 50% over the last decade. EPS has kind of stagnated over the last few years.
The fundamentals across the board are like this, in the sense that the numbers can be very good, even bordering on great, but nothing is really “wows” me.
And that’s been part of the problem. I was never willing to pay a premium for this business.
Love the commitment to the dividend. The boring business model is right up my alley. And it’s a very good operation. But I’m not paying a high price for any of it.
The stock was over $50/share back in the summer of 2015, which was unreasonable.
However, the valuation has become much more sensible over time, as it should be.
Every basic valuation metric I look at is now well off of its respective recent historical average.
And the stock offers a yield of over 4%, which is a lot to like when you combine that with highly dependable mid-single-digit dividend growth.
This stock isn’t going to make you rich overnight. But it’s a rock-solid, growing dividend that I can count on. That allows me to sleep soundly.
I plan to accumulate more shares in the near future, although I do see this as another ancillary position.
This purchase added $8.00 in annual dividend income.
I purchased 1 share of JPMorgan Chase & Co. (JPM) on 6/17/19 for $109.62 per share.
JPMorgan Chase & Co. is an American multinational investment bank and financial services company with assets over $2.5 trillion.
As I’ve noted a couple times, my current plan is to continue accumulating shares in this bank.
As long as the valuation remains in this range, I have capital, and competing opportunities aren’t extremely compelling, I’ll keep buying at least one share per month until the position is full.
This purchase added $3.20 in annual dividend income.
I purchased 3 shares of AbbVie Inc. (ABBV) on 6/26/19 for $67.05 per share.
AbbVie Inc. is a global pharmaceutical company with a particular focus on immunology and oncology.
I chose this stock as one that appeared to be compellingly undervalued on June 23. Just days later, the company announced that it had come to an agreement to acquire fellow pharmaceutical company Allergan PLC (AGN) for ~$63 billion. So my piece didn’t really have legs. Just one of those big deals that seemingly comes out of nowhere.
What does have legs, though, is my overall long-term investment thesis regarding AbbVie. The big picture doesn’t change all that much here. It’s just a different set of dynamics.
While I’m actually not a fan of this deal, the 16% or so drop in AbbVie’s shares after the deal was announced was, in my view, excessive. Said another way, the reduction in market cap (approximately $20 billion) would seem to offset much, or all, of any potential value destruction from the deal. Especially coming off of such a low/undervalued base.
I don’t like the additional debt at all. The balance sheet was already stretched. Using cheap stock as currency to acquire isn’t great, either, but at least the target in this case (Allergan) is not expensive.
The rationale for going after Allergan is pretty clear. AbbVie’s elephant in the room is Humira. The upcoming loss of earnings from future biosimilar competition in the US is a major issue for the company. This acquisition greatly diversifies the portfolio and gives them a much broader overall pipeline. The fact that it’s expected to be so accretive is icing on the cake.
Time will tell how it shakes out. I would have preferred them to focus on the existing pipeline, look at smaller bolt-ons, and clean up the balance sheet. The company went the complete opposite way.
But the dividend appears sound with the additional FCF allowing for a lot of flexibility as it relates to the balance sheet and the ongoing dividend payments. And there’s an argument to be made that the stock now deserves a higher multiple without the Humira overhang being so severe (assuming the acquisition closes).
This was the first time I’ve added to my AbbVie position in almost three years. I wasn’t particularly interested in adding to it at all, but this opportunity was too much to pass up.
This purchase added $12.84 in annual dividend income.
There were no sales since the last update.
Realty Income Corp. (O) announced a 0.2% increase in its dividend, upping the monthly dividend from $0.226 to $0.2265. This added $0.57 in annual dividend income.
Target Corporation (TGT) announced a 3.1% increase in its dividend, upping the quarterly dividend from $0.64 to $0.66. This added $0.40 in annual dividend income.
W.P. Carey Inc. (WPC) announced a 0.2% increase in its dividend, upping the quarterly dividend from $1.032 to $1.034. This added $0.64 in annual dividend income.
Medtronic PLC (MDT) announced an 8.0% increase in its dividend, upping the quarterly dividend from $0.50 to $0.54. This added $5.92 in annual dividend income.
JPMorgan Chase & Co. (JPM) announced a 12.5% increase in its dividend, upping the quarterly dividend from $0.80 to $0.90. This added $1.20 in annual dividend income.
L3Harris Technologies, Inc. (LHX) announced a 9.5% increase in its dividend, upping the quarterly dividend from $0.685 to $0.75. This added $10.40 in annual dividend income.
Bank OZK (OZK) announced a 4.3% increase in its dividend, upping the quarterly dividend from $0.23 to $0.24. This added $1.20 in annual dividend income.
There are 123 companies in the Fund. That’s an increase since last month due to the initiation of positions in KeyCorp and Leggett & Platt, Inc.
The Fund is now expected to generate a total of $14,050.00 in annual dividend income over the next 12 months. That’s an increase of 0.5%, or $66.15, over the prior update’s annual expectation of $13,983.85.
A fantastic tool for tracking your portfolio, progress, and performance is Personal Capital.
There’s not much I can say.
It was another great month across the board.
I hit a new milestone!
The Fund crossed over $14,000 in expected annual dividend income for the first time ever.
That’s a very, very nice annual income just for waking up and existing. Incredibly grateful to be in this spot. It’s truly humbling.
I feel fantastic about the purchases I made. I don’t invest as much capital as I used to, which is by design, but I’m just as excited as ever to go shopping at my favorite store in the world.
Regarding business updates from portfolio holdings, the biggest piece of news was the move made by AbbVie. That was already discussed above.
Jony Ive, the legendary product designer, leaving Apple Inc. (AAPL) is undoubtedly a loss for the company and its shareholders, but I do think the tech future is less hardware/design and more software, AI, VR, AR, IoT, cloud, etc. Plus, there’s the fact that Apple itself is aggressively trying to move toward services.
Harris Corporation completed its merger with L3 Technologies Inc., which now results in L3Harris Technologies, Inc. I’ve reflected that change in the portfolio spreadsheet.
Beyond that, it was a pretty quiet June.
Speaking of quiet, there were only a few dividend increases this month. And a number of them came from smaller holdings in the Fund. Even though these increases weren’t disappointing in relative terms, they didn’t necessarily move the needle much in absolute terms for me.
Still, the nature of a compounding dividend snowball is such that it gets bigger and rolls faster all by itself. Even quiet months make a rumble in the snow.
I’ll put that in perspective.
The $20.33 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 $581 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.
That’s almost $600 I didn’t have to invest, yet I achieved the same result in the end.
Not too shabby at all.
The trees in my forest continued to produce ever-more bountiful dividend fruit.
Stock prices go up and down, but dividends are almost always “in the green”. My favorite color.
Looking toward July, it’s business as usual for the Fund.
I’ll aim to invest $500 to $1,000 in fresh capital, which is my monthly target with the Fund now in “maintenance mode” from here on out. The snowball is doing the heavy lifting – err, rolling – now.
As noted before, I plan to acquire at least one share per month of JPMorgan Chase & Co. I’ll likely add to that position soon, especially after the dividend increase and their ~$30 billion buyback announcement.
I have those starter positions in both KeyCorp and Leggett & Platt, Inc. So I’ll be almost certainly busy building those up a bit more throughout July.
Beyond that, I’m sure other opportunities will spring up and interest me. I’m looking forward to sorting through those opportunities and putting some money to work.
What I’m most looking forward to, though, is just enjoying my life and taking maximum advantage of the freedom this dividend income provides me. It’s not something I take lightly. I’m very cognizant of my good fortune. And I’m grateful for it all.
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!
Full disclosure: I’m long all aforementioned stocks.
How was your month? Are your investments performing to your expectations?
Thanks for reading.
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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!