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, 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.
Purchases
I purchased 5 shares of W.P. Carey Inc. (WPC) on 9/4/18 for $66.20 per share.
W.P. Carey Inc. is a net lease real estate investment trust that invests in high-quality single-tenant industrial, warehouse, office and retail properties subject to long-term leases with built-in rent escalators. They have a property portfolio of 878 properties totaling 87 million square feet (as of June 30, 2018). Properties are located primarily in North America and Northern and Western Europe.
This is one of my older holdings. I haven’t added to it in years, but the REIT has become more appealing of late as the valuation has stayed compressed even while the dividend has routinely been increased. In fact, they just increased their dividend yet again this past month (noted below).
The REIT is guiding for AFFO/share to come in at somewhere between $5.40 and $5.50 this year, which means you’re looking at a P/AFFO ratio of just over 12 right now.
Their portfolio is really fantastic in terms of industry and geographic diversification. And they’ve been running a tight and steady ship for many years. I have no qualms with owning a slice of W.P. Carey. I sleep very well at night with this holding.
Helping me to count sheep (or is it dividends?) while I sleep is that massive yield – coming in at over 6% right now.
They’ve increased their dividend for 21 consecutive years. And they’re in a great position to continue that for the foreseeable future.
While the dividend growth might leave something to be desired (recent annual dividend growth has come in at ~2%), the high yield offers a lot to like.
This purchase added $20.50 in annual dividend income.
I purchased 5 shares of Omnicom Group Inc. (OMC) on 9/7/18 for $69.46 per share.
Omnicom Group Inc. (OMC) is an advertising, marketing, and corporate communications company.
This is a compelling long-term investment for numerous reasons. I went over many of those reasons just a few months ago. My thesis remains unchanged.
I was looking for an opportunity to average down a bit on my holding, and that’s just what I did.
However, I always saw this position as more ancillary than anything else, so I’ll probably cap it here.
This purchase added $12.00 in annual dividend income.
I purchased 1 share of Broadcom Inc. (AVGO) on 9/12/18 for $223.82 per share.
Broadcom Inc. is a leading designer, developer, and supplier of analog and digital semiconductor devices.
This company perhaps flies a bit under the radar, but I was convinced to invest in Broadcom after covering it for a recent UDGSOW piece.
This is a new position for the Fund. I plan to slowly scale into this business over the coming months with intermittent buys.
This purchase added $7.00 in annual dividend income.
I purchased 5 shares of Dominion Resources, Inc. (D) on 9/20/18 for $69.98 per share.
Dominion Resources, Inc. is a fully integrated gas and electric holding company with approximately 25,000 megawatts of electric generation capacity; 15,000 miles of natural gas transmission, storage, distribution and gathering pipelines; and more than 63,000 miles of electric transmission and distribution lines. They’re a 48% owner of the proposed Atlantic Coast Pipeline.
This is another older holding of mine that I took the opportunity to add to after recent uncertainty (especially related to the proposed acquisition of SCANA Corp. (SCG)) has brought the valuation down to a very reasonable level.
With or without SCANA, this is a great business that owns some fantastic energy infrastructure.
They’re operating well across the board. Q2 2018 results were strong, showing 11.3% YOY EPS growth. Revenue growth came in at almost 10% YOY.
They’ve increased their dividend for 15 consecutive years. And their strong 10-year DGR of 8.6% is coming on top of a fantastic yield of 4.77%. That yield, by the way, is more than 100 basis points higher than its five-year average.
Speaking of which, most basic valuation metrics look great relative to their respective recent historical averages.
I’ve got a nice-sized position in Dominion after this addition, but I wouldn’t mind picking up a few more shares if there were to be another valuation compression from here.
This purchase added $16.70 in annual dividend income.
I purchased 10 shares of Bank OZK (OZK) on 10/1/18 for $37.69 per share.
Bank OZK is a small US bank based out of Little Rock, Arkansas, with more 250 branches. Total assets exceed $22 billion.
This is another new position for the Fund.
What a wonderful little bank. Well, a little bank that is quickly becoming a larger bank.
Revenue is up almost eightfold over the last decade, while EPS has sextupled. Fundamentals are outstanding across the board.
Meanwhile, they’ve been increasing the dividend for 22 consecutive years, which obviously includes the period straight through the financial crisis and ensuing Great Recession (something that can’t be said for many other US banks). They actually tend to increase the dividend every quarter. The most recent increase (which you can see below) was the 33rd straight quarter in which the bank announced a dividend increase.
The valuation is awfully appealing across the board. Most basic valuation metrics are way off of their respective recent historical averages. The P/E ratio, at a little over 10, is very low for a company that is compounding in the double digits. The P/CF ratio is less than half of its three-year average.
For further perspective, the stock’s current price is the same as levels it was sporting way back in 2014 – when revenue and EPS were both less than half of where they’re now at.
There are some concerns over its loan portfolio (when are there not concerns about a business?), especially seeing as how the bank has aggressively moved into construction lending in recent years. This tiny bank is behind some of the biggest projects in some of the biggest markets in the US.
But these concerns seem to be more than priced in. It’s almost as if the last four years of growth are worth nothing. Of course, growth could, and likely will, slow in the new construction market. And sticking to strict lending standards means opportunities might dry up.
I never like owning large positions in small banks, but I could see myself picking up another 20 or so shares before it’s all said and done. That would make it roughly a 1/3 position, which I think is appropriate for a small, higher-risk bank.
This purchase added $8.00 in annual dividend income.
Sales
There were no sales since the previous Fund update.
Dividend Increases
Verizon Communications Inc. (VZ) announced a 2.1% increase in its dividend, upping the quarterly dividend from $0.59 to $0.6025. This added $3.75 in annual dividend income.
STORE Capital Corp. (STOR) announced a 6.5% increase in its dividend, upping the quarterly dividend from $0.31 to $0.33. This added $3.60 in annual dividend income.
Microsoft Corporation (MSFT) announced a 9.5% increase in its dividend, upping the quarterly dividend from $0.42 to $0.46. This added $4.00 in annual dividend income.
Realty Income Corp. (O) announced a 0.2% increase in its dividend, upping the monthly dividend from $0.22 to $0.2205. This added $0.57 in annual dividend income.
W.P. Carey Inc. (WPC) announced a 0.5% increase in its dividend, upping the quarterly dividend from $1.02 to $1.025. This added $1.50 in annual dividend income.
McDonald’s Corporation (MCD) announced a 14.9% increase in its dividend, upping the quarterly dividend from $1.01 to $1.16. This added $33.00 in annual dividend income.
Bank OZK (OZK) announced a 5% increase in its dividend, upping the quarterly dividend from $0.20 to $0.21. This added $0.40 in annual dividend income.
FIRE Fund
The FIRE Fund is now valued at $382,101.05. That’s a 1.2% increase over the last reported market value of $377,616.12.
There are 112 companies in the Fund. That’s an increase since the last update due to the initiation of positions in Broadcom and Bank OZK.
The Fund is now expected to generate a total of $13,123.18 in annual dividend income over the next 12 months. That’s an increase of $112.52, or 0.9%, over the prior update’s annual expectation of $13,010.66.
A fantastic tool for tracking your portfolio, progress, and performance is Personal Capital.
Conclusion
I don’t even know what to say. I’m blessed and humbled by what the Fund has become.
The vast majority of the portfolio was built during a six-year stretch, starting in early 2010 and culminating in early 2016 (upon which time I reached financial freedom). I dedicated every ounce of my being toward saving and investing as much as possible during that time frame so that I could achieve FIRE as fast as possible.
To see what that concentrated period of superhuman effort has turned into is really amazing. I’m incredibly proud.
And I’m relieved these days to be able to let my foot off the pedal a little bit, because the relentless acquisition of stock/assets/money was never a permanent or interesting goal, much in the same way the relentless acquisition of stuff isn’t interesting or worthwhile to me.
Part of that relief is, of course, possible due to the very nature of the portfolio.
It’s comprised of some of the best businesses in the world, which means I don’t have to babysit them. I don’t need to worry about McDonald’s selling burgers or Realty Income collecting its rent. I can go about my life with a certain sense of satisfaction and peace of mind that’s truly priceless.
Moreover, the snowball nature of dividend growth investing means I’m looking at regular increases in my purchasing power – without any action or input on my part. I get “pay raises” without lifting a finger. Again, a total relief.
To wit, the $46.82 increase in my annual dividend income that came about purely through organic dividend increases announced by my holdings this past month is akin to investing ~$1,340 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.
This was, however, one of the heavier months I’ve had in some time in regard to stock purchases.
I generally aim to invest $500 to $1,000 per month in this current post-FIRE phase, which is basically my vision of a portfolio in “maintenance mode”, but September was an above-average month. I wasn’t planning on it being that way, but I guess that’s just how it worked out. I’m still under that upper level when averaging it out on an annual basis, mostly because I invested very little fresh capital during the first quarter of 2018.
And this update also includes a good chunk of the capital I was planning on investing in October, as the Bank OZK buy occurred on October 1.
In addition to the investing activity being a bit heavier than usual, I coincidentally also bought some higher-yielding stocks.
Those actions combined means this was the first month in a while in which the majority of the increase in my annual dividend income was driven by new stock purchases (rather than organic dividend raises).
Looking toward October, it’ll be same as it usually is for me. I’ll look to allocate a little capital toward some high-quality dividend growth stocks trading at appealing long-term valuations. The rest of October will be fairly light, however, considering that the Bank OZK buy already occurred this month.
Unless Broadcom were to significantly move higher, picking up another share or two in the near term is one of my top ideas. There are a number of tech companies beyond Broadcom that look good here, too.
W.P. Carey has moved down a bit since I last bought (along with REITS in general). I wouldn’t mind buying a few more shares of that business at a lower price.
Many names across energy, finance, and healthcare also continue to look fairly attractive right now, especially relative to the broader market (which, of course, contains a number of stocks trading at eye-watering valuations).
I was looking at Exxon Mobil Corporation (XOM) just a few weeks ago, but it shot right up on me. I might still come back around to that name in October. We’ll see what competing opportunities look like.
Investing certainly isn’t the priority it once was for me, but I do still greatly enjoy the process of finding and buying shares of wonderful businesses at appealing valuations for the long term.
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).
I’m very excited for another month. And I don’t mean that just in terms of buying stocks and collecting dividends; I’m very excited to live this amazing life, go through new experiences, and grow as a person. Every month has millions of seconds – millions of moments – to make the most of your life. Don’t squander those opportunities.
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: Sira Anamwong at FreeDigitalPhotos.net.
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!
Hi Jason,
Thanks for the update, it is always nice to see the progress in real time. I was wondering if you ever considering purchasing stocks such as Alphabet or Facebook in expectation of a future dividend, given their significant cash positions. I have started to add a few stocks like this to the portfolio. As always, thank you for your posts.
Lukaivan,
I think the answer to your question is fairly obvious if you’ve been reading my stuff.
There are some great businesses out there that don’t pay a dividend. Likewise, there are many, many terrible businesses that also do not pay a dividend. Either way, I like collecting my fair share of what’s owed to me.
Cheers!
Good point Jason, as Kevin O’leary said any stock don’t pay dividend is just speculation. You buy it for a price and hope to sell it for higher ..which is the definition of speculation.
atm,
Well, I’m not interested in “that” debate. Been there, done that. To each their own. It doesn’t behoove me to convince anyone to buy my stocks. But I’m not here, in my 30s, FIRE, living off of passive and growing dividend income in Thailand by investing in stocks that don’t pay me a dime (speculating that they’ll be worth more in the future, at which time I’d have to sell those shares and reduce my equity). I don’t want to rely on the opinions of others to allow me my wealth, passive income, and freedom. I instead rely on great businesses to pay me a portion of the growing profit they’re so skilled at producing. Works for me. 🙂
Cheers!
Hi Jason,
One thing to add to your comment. I am of view that the opinions of others tend to be confusing in particular such opinions are in contrast of one’s view. Just take it with a pinch of salt and remain focused on one’s belief. Frankly speaking, the investment portfolio will not be one’s concern in particular for one who have achieved FI. It will be worthwhile to spend the time on the hobbies in which one desire to embark after quitting from the rat race.
WTK
WTK,
That’s why I said “to each their own” in my comment. 🙂
Cheers!
Great progress this month, Jason! An extra $112 will go a long way every year!
When your basic living expenses are so low over there, can you feel the impact of these raises or does it just get lost in your bank account?
I imagine the contribution towards the snowball will be felt, but without having reached the drawdown portion of our FIRE journey I’m curious about these raises’ impact on your daily life!
1mil,
Thanks, man!
Yeah, I definitely feel these increases, especially from a psychological standpoint (knowing that I’m that much more free and flexible with that extra passive income). I’d actually say I feel them even more, because they’re basically being magnified by a factor of three (due to a tripling of my local purchasing power). I mean, $50 in organic dividend income is great, but $150 all of the sudden is really on your radar. 🙂
Hope you had a great month, too.
Cheers!
September was oddly slow for us, actually! Managed to save a fair bit, but vanguard’s ETFs decided to pay out Oct 1 instead of late September this year. Odd–but it means we’ll have two pretty decent months instead of a caviar September and then a beans-and-rice October.
Just kidding. We’re frugal, so it’s beans and rice no matter how many dividends are coming in! 😉
Hi Jason
Great update. Love to hear about the $46.82 in organic increases in dividend income. Dividend Growth investing is a great way to create and maintain a good retirement stream of income. I have been looking to increase my WPC position as well. I haven’t looked at OMC, AVGO, or OZK I will have to take a look and see if they would a good add to my portfolio. Again thanks for the update
Glad to hear about the one year anniversary with that pretty gal your with. From your pictures it looks like you two are happy and, having some great adventures together. I wish both of you the best in peace and happiness. Enjoy your the journey through life.
Cheers
Michael,
Thank you so much. Life is incredible over here. Each aspect of my life is individually great, but it’s wonderful when you’re able to put it all together. 🙂
It’s my pleasure to share the update. Hope it provided you with some inspiration and ideas!
Best regards.
Nice progress Mr. Jason, thanks for the upgrade. I also added to my AVGO position this past month I believe is an excellent dividend growth company. I hope everything is going well. Take care; Omar
Omar,
Hey, glad to be a fellow shareholder. I think we’ll be getting a pretty impressive dividend raise soon! 🙂
Best wishes.
Thanks for sharing the update, Jason. It’s really helpful to see behind the curtains of the portfolio for someone in the early stages of building. That’s a nice group of dividend raises. As for my month, it was good overall. I posted really high year over year growth and added a few positions. Have a great week!
RTC,
Happy to share!
It’s been a great honor of mine that I’ve been able to show what this looks like, in real-time, for all of these years. Someone might look at this result above and think it’s crazy, or that it’s way too much to even contemplate. But my first updates back in early 2011 showed what it was like to start from scratch, basically. It’s easy to do the math. It’s a lot harder to go through the motions and do everything I did to get here, though. I’m just glad that I’ve been able to keep at it for this long and show how it’s done. 🙂
Glad to hear you had a great month, too. Keep at it!!
Cheers.
At first, I thought Bank OZK was gonna be some tiny bank from Poland with sketchy compliance practices. I see it’s just Bank of the Ozarks. I’m doing some research now and I like what I see. That 20% payout ratio is great for the peace of mind it brings.
Sincerely,
ARB–Angry Retail Banker
ARB,
Some tiny bank from Poland with sketchy compliance practices? What kind of investor do you think you’re talking to? Haha!
All kidding aside, it’s one of the best banks I’ve run across, fundamentally speaking. The only issue (and why the valuation is where it’s at) is that they’ve been pretty aggressive in recent years. So far, it’s been phenomenal. But that could cause some issues down the road. Wouldn’t want to bet the farm on this one, but I like it as a smaller position.
Best regards.
Hi Jason,
Thanks for being an inspiration to alot of us and being our fearless leader!
One quikc question, why only 1 share of AVGO? I am guessing have a free trade and wanted to dip your toes, but i wanted to understand your logic?
Thanks for your time in advance! Keep kicking butt!
my first $500 dividend month will be in december!
Mike,
Thanks for the support. It’s an honor to share my thoughts and show what this lifestyle looks like for me. Some of this stuff (FIRE, living abroad, etc.) isn’t for everyone, but it’s been phenomenal for me. I’m happy to be in a position to inspire others. 🙂
As for your question, you’ll want to read the article in its entirety. I’m no longer aggressively buying stocks to achieve FIRE. The fact that I even invested this much over the course of one update is a bit of an anomaly, truth be told. So picking up a couple hundred bucks of shares in this or that company is the norm for me, as it has been for quite some time now. I don’t pay commission fees, by the way.
Best wishes.
J –
Love that you pick up bank of the Ozarks! Ah… a community bank that truly has grown enormously recently. That’s the lifespan of a community bank right now – grow/eat or be eaten. Also – love the div increases, was a nice month : )
-Lanny
Lanny,
Enormous is a good word for their growth lately. It’s definitely not as conservative as your typical community bank, nor is it even the same bank it was a decade ago. But I like their moves, and the valuation is almost pricing in a total collapse. We’ll see how it goes! 🙂
Thanks for dropping by. Hope you had a great month!
Cheers.
Jason,
I really enjoy reading the Fire Fund Updates. Its very inspiring and interesting to read!
Pretty much all of my taxable investments are in two index funds and they just paid out another quarter of dividends. This has been an incredible year so far for dividend growth. Its kind of funny to see all the drama that goes on in the financial news, yet it doesn’t really seem to have any bearing on my dividend growth, which is the most important goal I have for my investments.
You would think with all the drama there would be pandemonium going on with my portfolio, but its almost like the financial news is not even relevant. Its amazing in a way.
Currently, I own 5,868.75 shares of VHDYX and 6,518.12 shares of VIHAX, with a cost basis of roughly $404,251.84. The year over year dividend growth looks like this so far:
VHDYX
Q1 = 12.71%
Q2 = 5.27%
Q3 = 10.14%
Avg = 9.37%
VIHAX
Q1 = 13.23%
Q2 = 13.59%
Q3 = 18.57%
Avg = 15.13%
Combined Avg = 12.25%
I am ecstatic with how good the div growth has been this year. Just one more quarter to go to finish out a fantastic year.
jh,
That’s great stuff. I don’t see how you could be disappointed with that YOY growth!
Yeah, I hear you on the news/noise. I don’t pay any attention. That’s even easier being over here. I couldn’t tell you a single thing about political news, financial news, etc. It’s totally irrelevant to me.
If you want to know what one of my businesses is up to as far as innovation, competition, growth, or something of that nature, I’m your guy. If you want to know what some talking head thinks about Trump or the stock market, I wouldn’t have the slightest idea (nor would I care). The life of a long-term dividend growth investor. It’s pretty good. 🙂
Best regards!
Hi Jason,
I think that the best approach is to focus on the things one desires to do as per his/her preference. Diversification is the safe way as it spreads the risk associated with the investment portfolio. Focus on developing one’s interest while the investment portfolio will generate the dividends on its own accord for one.
WTK
Please forgive me if you’ve covered this elsewhere and I simply haven’t come across it yet, but do you earn any other income over and above your dividends?
Tracy,
Happy to answer that.
I do earn an active income above and beyond passive income (as do most who are FIRE). I’ve covered that before through multiple articles, but I do my best to link to those various articles in the introduction to my monthly expense reports. You’ll see what I mean by checking out the most recent one:
https://www.mrfreeat33.com/expenses-for-august-2018/
Cheers!
Thanks so much for your prompt reply. So, at this stage, are you reinventing most (all) of your dividend income and using other income sources (passive or otherwise) to cover your living expenses? And, if necessary, could you live comfortably, as you live now, on your dividend income for a period or even indefinitely?
Sorry, reinvesting should be the word in the second sentence, not reinventing
Tracy,
I’m happy to answer questions, but the answers to your questions are in the expense reports (one of which I just linked to for you). You’ll want to actually read through the articles and any associated links for all of that information.
Passive income pays for my life. I invest a portion of my active income. My investing activities will likely tail off over the course of the next decade or so as I move more heavily into philanthropy.
Cheers.
Thanks Jason. I appreciate your replies. Sorry to have annoyed you. I will read more thoroughly once my kids are in bed and I’m less distracted. Really sorry.
Tracy,
Not annoyed at all. I just didn’t want to do either of us a disservice by trying to quickly repeat an answer that is already given in a much more thorough way. 🙂
Cheers.
Thanks so much. I’ve enjoyed what I’ve learnt so far from you. Much appreciated.
Good read. I was wondering how you live on so little, then I saw “Thailand” and now I get it. I’m actually here for work this week in Rayong City and thought this exact thing yesterday. If I lived here for 5 years, I could save like 80% of my income! Is your money in one place or in multiple acts?
Daniel,
Thailand is tough to beat for high QOL at the low COL. 🙂
Not sure I understand your question, but I’ve shared all of the details about my money here on the blog. The search bar can probably answer any questions you might have as it pertains to finances.
Best regards.