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, lifestyle options, and long-term 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 3M Co. (MMM) on 10/1/19 for $160.90 per share. I purchased another 1 share on 10/3/19 for $153.44 per share.
3M Co. is a diversified global manufacturing conglomerate.
I highlighted this high-quality stock as an undervalued opportunity back in early June. In my view, it’s worth closer to $200/share than the $175 it’s at now.
While a lot of other stocks have moved up since I published that article, 3M has kind of languished. That’s made it even more appealing on a relative basis.
This position dates back more than four years, but this was the first time I’ve added to it since I initiated it. I think this was an opportunistic time to buy shares of a world-class company that has one of the longest dividend growth streaks in existence.
These purchases added $11.52 in annual dividend income.
I purchased 1 share of Delta Air Lines, Inc. (DAL) on 10/1/19 for $57.28 per share. I purchased another 1 share on 10/2/19 for $53.53 per share. Then I added another 1 share on 10/3/19 for $52.44 per share. Finally, I added 1 more share on 10/10/19 for $51.40 per share.
Delta Air Lines, Inc. is a global airline company.
I initiated a position in the airline in back in July. As I noted when I went over the investment rationale, I plan to slowly accumulate shares in the business while the valuation remains in this range.
The company is firing on all cylinders. The fundamentals are arguably better than ever. But I still have concerns about the broader industry, which is why I don’t plan to make this a sizable position in the Fund.
That said, it is highly likely that I’ll buy more stock in Delta Air Lines in November. I’d like to own more. Being able to average down, like I did in October, would be fantastic. I’d love to average down even more.
These purchases added $6.44 in annual dividend income.
I purchased 2 shares of Exxon Mobil Corporation (XOM) on 10/14/19 for $68.68 per share.
Exxon Mobil Corporation is an integrated energy company engaged in the exploration for, and production of, crude oil and natural gas, the manufacturing of petroleum products, and the transportation of oil, natural gas, and petroleum products.
Like 3M, Exxon Mobil is an older holding in the Fund. And like 3M, this is the first time since I initiated the position in Exxon Mobil that I decided to add to it.
It seemed like an opportune time to do so.
At my price, the yield on the stock is just a touch over 5%. It’s very, very rare that you’re able to get a 5%+ yield on Exxon Mobil stock. For perspective, the five-year average yield on this stock is just 3.7%. We’re way over that.
This is a Dividend Aristocrat with 37 consecutive years of dividend increases. Whenever I can snag an Aristocrat with a 5%+ yield, I’m all over it.
And with a 10-year dividend growth rate of 7.6% that’s coming on top of that 5%+ yield, the numbers stack up pretty nicely for me in terms of potential long-term aggregate dividend income.
Exxon Mobil’s last five years have been, to put it bluntly, rough. Crude oil prices are running about half of what they were back in the summer of 2014. This obviously has an effect on a major upstream player like Exxon Mobil.
Fortunately, the integrated nature of the business model means they’re able to keep plowing ahead in just about any pricing environment out there. That’s partially evidenced by that lengthy dividend growth track record. They’ve seen better days, but they still print money.
Every basic valuation metric I look at is much lower than its respective recent historical average. The stock is priced for low expectations moving forward. I’m happy to collect that big dividend in the interim.
In my opinion, this is your classic undervalued high-quality dividend growth stock. That’s right in my wheelhouse.
There are some long-term existential questions regarding the future of some of these conventional energy products, but I don’t see any large-scale viable replacement on the horizon.
This purchase added $6.96 in annual dividend income.
I purchased 1 share of JPMorgan Chase & Co. (JPM) on 10/16/19 for $119.70 per share.
JPMorgan Chase & Co. is an American multinational investment bank and financial services company with assets over $2.5 trillion.
This is the seventh month in a row in which I’ve bought stock in this high-quality bank.
I’ve gone over my rationale for doing so numerous times already, so I won’t rehash any of that. I’ll just note that I’m remaining consistent and true to my word. It’s highly likely that I’ll continue to accumulate shares in JPMorgan Chase throughout the rest of 2019.
This purchase added $3.60 in annual dividend income.
I purchased 5 shares of The GEO Group, Inc. (GEO) on 10/17/19 for $15.33 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.
Politics have brutally punished this stock.
That’s okay by me. The valuation has been brought down to ridiculous levels. The P/AFFO ratio is just 5.7, based on the midpoint guidance for FY 2019 AFFO/share. Yeah. A P/AFFO ratio below 6. It’s in stupid territory.
Meantime, the yield is now over 12%.
It’s almost as if we’re talking insolvency here. I’m in disbelief.
No matter. The company provides a necessary service to society. They continue to generate a lot of money. And they’re paying out a big and growing dividend. I’m happy to add way down here.
This purchase added $9.60 in annual dividend income.
I purchased 5 shares of Invesco Ltd. (IVZ) on 10/28/19 for $17.31 per share. I purchased another 5 shares on 10/31/19 for $16.68 per share.
Invesco Ltd. is a global asset manager that provides investment management services to both retail and institutional clients.
This is a new position for the Fund.
I recently provided a lengthy write-up on why I think Invesco is pretty compelling here, particularly at this absurd valuation.
It’s not the bluest blue-chip stock around. I won’t argue that.
But I think its high yield, low valuation, and reasonably solid fundamentals make it worthy of installing it as a smaller position inside of a broadly diversified, high-quality portfolio. And that’s exactly what I’m doing with the stock here.
This isn’t the kind of stock I’d like to go crazy with in terms of the position size. But I plan to add to the holding over the near term, so long as the valuation remains this appealing.
These purchases added $12.40 in annual dividend income.
There were no sales since the last update.
Bank OZK (OZK) announced a 4.2% increase in its dividend, upping the quarterly dividend from $0.24 to $0.25. This added $1.20 in annual dividend income.
Omega Healthcare Investors Inc. (OHI) announced a 1.5% increase in its dividend, upping the quarterly dividend from $0.66 to $0.67. This added $6.40 in annual dividend income.
Crown Castle International Corp. (CCI) announced a 6.7% increase in its dividend, upping the quarterly dividend from $1.125 to $1.20. This added $4.50 in annual dividend income.
ONEOK, Inc. (OKE) announced a 2.8% increase in its dividend, upping the quarterly dividend from $0.89 to $0.915. This added $10.00 in annual dividend income.
Visa Inc. (V) announced a 20% increase in its dividend, upping the quarterly dividend from $0.25 to $0.30. This added $4.00 in annual dividend income.
VF Corp. (VFC) announced a 11.6% increase in its dividend, upping the quarterly dividend from $0.43 to $0.48. This added $11.00 in annual dividend income.
Starbucks Corporation (SBUX) announced a 13.9% increase in its dividend, upping the quarterly dividend from $0.36 to $0.41. This added $10.00 in annual dividend income.
Iron Mountain Inc. (IRM) announced a 1.2% increase in its dividend, upping the quarterly dividend from $0.611 to $0.6185. This added $0.60 in annual dividend income.
AbbVie Inc. (ABBV) announced a 10.3% increase in its dividend, upping the quarterly dividend from $1.07 to $1.18. This added $19.80 in annual dividend income.
There are 126 companies in the Fund. This is an increase over last month, due to the initiation of a position in Invesco Ltd.
The Fund is now expected to generate a total of $14,479.63 in annual dividend income over the next 12 months. That’s an increase of 0.8%, or $118.02, over the prior update’s annual expectation of $14,361.61.
A fantastic tool for tracking your portfolio, progress, and performance is Personal Capital.
Awesome stuff. Another fantastic month for the Fund.
What really stands out to me is the fact that the Fund’s expected annual dividend income has crossed the $14,400 threshold.
That means the Fund is now expected to generate an average of more than $1,200/month in dividend income.
A new milestone!
I’m super happy to see that.
$1,200 per month is a nice chunk of money. It’s especially nice when you don’t have to lift a finger for it. And it’s even nicer when you live abroad and have effectively tripled your purchasing power. This would be similar to collecting $3,600/month in any desirable US city.
The dividend increases that were announced this month were all more or less in line with my expectations. The only one that comes across as noticeable to me is the increase announced by Omega Healthcare Investors Inc. They’ve been busy straightening out the business, keeping the dividend static for a while. It’s awfully nice to see them back on track. Patience pays off.
I don’t have much to report on regarding any substantial developments affecting holdings inside of the Fund.
The only piece of major information I can think of is the removal of Steve Easterbrook as CEO of McDonald’s Corporation (MCD).
Easterbrook had a consensual relationship with an employee, which is against company policy. It’s an unfortunate development. Poor judgment swiftly ended a lengthy and very successful career with the company. I think Easterbrook was doing a phenomenal job, so it’s a real loss for shareholders.
There was also the JEDI contract win by Microsoft Corporation (MSFT).
While not very large by itself, the contract win is a ringing endorsement of the quality and breadth of Microsoft’s Azure platform. It’s a reputation boost that could reverberate across the company for years to come.
Other than that, a number of earnings reports came in. I have yet to run into anything that shocked me. Some reports were better than others. That’s the normal course of business.
What else is the normal course of business?
Collecting growing cash dividends from quality companies!
The companies that comprise the Fund continue to march onward and upward, increasing their profits and the dividends they send to their shareholders.
The compounding dividend snowball is gaining size and speed, even while I go about my life and do as I please.
I’ll put that in perspective.
The $67.50 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 $1,928 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 organic dividend growth compounding away. And it’s amazing, folks.
Coming up with almost $2,000 in a single month to invest is no easy chore. It wasn’t that long ago that I struggled to do something like that.
Yet I experienced the same result to my dividend income as if I had invested that much, even without investing a dime.
The trees in my forest continue 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 November, 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.
I expect some familiar names to pop back up in November. I’m actively building positions in a number of companies mentioned above. So it’s going to be fairly repetitive. I am nothing if not consistent.
One stock that I didn’t get around to buying more of in October is Leggett & Platt, Inc. (LEG). The stock shot up after a solid earnings report and is now fully valued. So I might just take a break on that one.
I think a large number of financials, the major airlines, certain industrial names, and even some energy stocks look pretty appealing. So I’ll likely direct my capital toward certain stocks in these areas throughout November.
Beyond that, I’m sure other ideas will spring up and interest me. I’m looking forward to sorting through those opportunities and putting a little bit of 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!
As always, I’ll publish stock purchases in real-time over at Twitter and Facebook. So make sure to follow me on social media (where I also share numerous other updates about my life as an early retiree living abroad).
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!