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 Cardinal Health Inc. (CAH) on 8/6/18 for $50.88 per share.
Cardinal Health Inc. is a major distributor of pharmaceuticals and medical supplies to a variety of healthcare clients.
This might just be one of the most undervalued dividend growth stocks out there, as I discussed in early August.
I first initiated a position in Cardinal Health back in August 2016. The stock price has dropped somewhat precipitously since then, mostly due to concerns over the business model instead of any particular issue with business performance.
Of course, that’s something I’m actually happy to see, so I’ve averaged down on the stock on three separate occasions.
However, I view myself as properly exposed to this company now, so it’s unlikely I’ll add any more shares from here on out.
This purchase added $9.52 in annual dividend income.
I purchased 5 shares of Starbucks Corporation (SBUX) on 8/16/18 for $53.24 per share.
Starbucks Corporation is the world’s leading retailer of high-quality, specialty coffee products. These products are sold in more than 28,000 stores across 76 different markets, in addition to multi-channel retail.
This is a stock I’ve been actively accumulating for months now. Since I’ve described my rationale with depth, I won’t needlessly repeat myself.
This is another position that is probably full. If another substantial compression in valuation were to occur, I’d be interested in revisiting that. Otherwise, I like my allocation to this world-class coffee chain here.
This purchase added $7.20 in annual dividend income.
I purchased 5 shares of Papa John’s International Inc. (PZZA) on 8/16/18 for $43.58 per share.
Papa John’s International Inc. operates or franchises more than 5,000 pizza delivery and carryout stores in 45 countries and territories around the world.
Another repeat purchase. I took some time last month to lay out my thought process regarding this stock.
I always love opportunities like this, where you have a good company with an unchanged product/service that’s taking a beating on the stock price because of some short-term, ancillary problem.
That said, I had never planned on this position being a large portion of the Fund, so it’s pretty likely I’ll cap it here.
This purchase added $4.50 in annual dividend income.
I purchased 5 shares of Altria Group Inc. (MO) on 8/27/18 for $58.96 per share.
Altria Group Inc. is one of the world’s largest tobacco companies. It is the largest cigarette manufacturer in the United States.
This is an old holding of mine. I accumulated the bulk of the position back in September 2010 for $24.01 per share. The stock has obviously increased in price since then, but the value of the business has also increased (as have the dividends).
I haven’t added to this position in years. The last time I bought shares in Altria Group was back in the summer of 2013. So it’s been a while.
But I believe the YTD drop in the stock price, along with the two dividend increases this year, have resulted in a pretty compelling valuation here.
Although this position isn’t that large, my overall allocation to tobacco as an industry is at about 4% (a level I’m comfortable with, but not interested in going too far over). As such, it’s unlikely I’ll be too aggressive with this name (or any other tobacco name) in the near term. I might be able to swing another small handful of shares, but that would be it.
This purchase added $16.00 in annual dividend income.
Sales
There were no sales since the previous Fund update.
Dividend Increases
Illinois Tool Works Inc. (ITW) announced a 28.2% increase in its dividend, upping the quarterly dividend from $0.78 to $1.00. This added $30.80 in annual dividend income.
Altria Group Inc. (MO) announced a 14.3% increase in its dividend, upping the quarterly dividend from $0.70 to $0.80. This added $32.00 in annual dividend income.
Harris Corporation (HRS) announced a 20.2% increase in its dividend, upping the quarterly dividend from $0.57 to $0.685. This added $18.40 in annual dividend income.
Bank of Nova Scotia (BNS) announced a 3.7% increase in its dividend, upping the quarterly dividend from C$0.82 to C$0.85. This added $9.60 in annual dividend income.
FIRE Fund
The FIRE Fund is now valued at $377,616.12. That’s a 1.7% increase over the last reported market value of $371,269.52.
There are 110 companies in the Fund. This is unchanged since the last update.
The Fund is now expected to generate a total of $13,010.66 in annual dividend income over the next 12 months. That’s an increase of $134.42, or 1.0%, over the prior update’s annual expectation of $12,876.24.
A fantastic tool for tracking your portfolio, progress, and performance is Personal Capital.
Conclusion
I just couldn’t be more pleased with how the Fund is coming along.
Indeed, I couldn’t be more pleased with how my life, which is underpinned by financial freedom, is coming along. And it’s largely thanks to the Fund, and the dividend income it generates, that I can live the way I do.
It was another consistent month where I put a little capital to work in high-quality businesses that value me as a shareholder, proving out that value by rewarding me with those growing dividends. I purchased shares in these businesses at compelling valuations, and I intend to hold for the long term.
On top of that, some fine, fine companies announced some massive dividend raises this month. What I lacked in quantity, I more than made up for in quality. And two of these companies (Altria and Bank of Nova Scotia, respectively) delivered their second dividend increases this year.
To put this dividend growth in perspective, the $90.80 increase in my annual dividend income that came about by way of totally organic dividend growth (via those dividend increases) is akin to investing ~$2,600 in fresh capital at a 3.5% yield (the average portfolio yield) – except I invested $0 to achieve that result.
That’s my snowball… well, snowballing.
The Fund’s organic dividend growth once again did the heavy lifting in terms of advancing my annual dividend income, which is how it’s been for a while now. The portfolio is more or less in “maintenance mode” now, as I no longer need to spend an inordinate amount of time focused on money and buying stocks.
My money is now buying me time, rather than other way around.
It was the plan all along, and it feels great when a plan comes together like this.
Speaking of feeling great, I hit a new milestone this month!
The Fund is now, for the first time ever, expected to generate over $13,000 in dividend income over the next 12 months.
It’s nice to see these round numbers start to roll over more quickly. For perspective on that, the $12,000/year milestone occurred with the February 2018 Fund update. So we’re talking seven months to go from $12,000 in expected annual dividend income to $13,000 in expected annual dividend income – all while no longer investing aggressively. It’ll be neat to see how fast the $14,000 mark comes about.
Looking forward, the consistency I’ve been showing over the last few months is probably going to end. A lot of stocks I’ve been buying recently have added up to positions that I feel fairly comfortable with, so I may end up allocating capital differently for the rest of the year.
Also, my spending may be a bit heavier than usual as I wind down the year, which will limit investment capital. Things for September look really good (perhaps even better than average), but it’s likely that I’ll lighten up rather significantly over the course of the fourth quarter of the year.
Getting into future investments, I wouldn’t mind adding to my Omnicom Group Inc. (OMC) position soon. Adding to JM Smucker Co. (SJM) is also on my mind.
In my view, W.P. Carey Inc. (WPC) offers an attractive yield and valuation here, so I might add to my position in the near term.
Healthcare almost across the board still looks good to me.
I’ve been circling Ingredion Inc. (INGR). Broadcom Inc. (AVGO) is also interesting. Either of these would be a new position.
And there are some plays in energy that look pretty strong right now.
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 except INGR and AVGO.
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!
Very good performance. I own Altria and Bank of Nova Scotia as well and both are really nice companies. I also would like to have some ITW or Harris, but you can´t have everything. But this is not necessary anyway.
Yes, sometimes I`m a little bit scared how mighty the growth of the dividends is. I was thinking back how difficult it was to get from 0 EURO dividends to 1.000 Euro dividends in the beginning. It took quite a long time and the dividend increases where real at that time as well, but I didn´t see them too much. Now it took only 7 months for you to increase 1.000 $ dividend income with around 7.000 $ investing in new shares and the major of the rest is dividend increases. In five years you should be far beyond 20.000 $ dividend income per year and its always accelerating.
Regarding Cardinal Health I think the same and I bought some as well in August. I started my second position in Tencent. Not much dividend income, but I believe that the Chinese companies will grow a lot the next years. I don´t have to invest like you any more but ist still a good habbit I don´t want to lose.
Lets see if you get the next 1.000 $ in six months :).
Regards
Oliver
Oliver,
We’re on the same page. Money wants to work hard. Harder than I ever could or would. I say, let it work. 🙂
We’ll see how quickly the next $1,000 comes around. I’m certainly not in any hurry (or else I’d be investing more), but it’s nice to see the plan come together like this. It’s great to see that dividend growth come to fruition.
Congrats on your own success over there!
Cheers.
Great month report. I love how fast you went from $12000 to $13000 so fast.
I am also looking into AVGO. I find it very attractive as well. Looking forward to next months report!
FV,
Thanks, man!
Yeah, AVGO is interesting. A lot of M&A to sift through, so I’m not sure if it goes into the “too hard” pile. The valuation appears to be very appealing here.
Best regards.
Its awesome watching your portfolio grow. What’s even more exciting is how compound growth really picks up the larger the base gets. My portfolio is pretty similar to yours. Roughly $402k in VYM and VYMI. Last year the payout was $12k and I think it might get to $13.3k this year if the next two quarters have the same div growth rate as the first two.
What I am really looking forward to is $18k a year in dividends. It just seems like getting to $1,500 a month from dividends is the point where you really are set for life.
jh,
Totally with you. Seeing that snowball start to accelerate is a beautiful thing. That acceleration allows me to decelerate, which frees me up to focus on other areas of my life. 🙂
It’s interesting that you bring up $18k/year. That was my original goal back in the day: $18,000/year in dividend income by age 40. Of course, I became a bit more aggressive with the timeline once I was in it, and I realized that a side hustle can really bridge the gap. I’ve been pretty flexible. I’m just about at that mark right now when you add in the book royalties (which are totally passive). I’m interested to see where I actually end up at 40, considering I quit the job eight years early and stopped going crazy with the stock buying two years ago.
Have fun over there with your snowball!
Best wishes.
Just thinking out loud here. Last year my dividend income was around $12k. This year I’ve had over 11% growth the first two quarters, but that’s pretty high. For VYM I know that over the last ten years the avg div growth per year was 5.87%. I’m not sure what it would be for VYMI as the ETF is too new, but let’s say it was the same.
So, with that info a dividend of $12k growing 5.87% per year would look like this (this is with no re-investment):
YEAR VALUE
====== =======
(0) 12000.0
(1) 12704.4
(2) 13450.15
(3) 14239.67
(4) 15075.54
(5) 15960.47
(6) 16897.35
(7) 17889.23
I’m stopping at $17,889.23 as that is close enough to my goal number of $18k. So the question I was wondering is how much cash would I need to accumulate, so that my dividend income plus my cash on hand, would add up to $18k starting this year and going until year seven, when I would hit my target.
Calculating that out (starting with $12,704.40) I get a total of $19,783.19 as the amount of cash I would need to accumulate, so that I could wait the seven years needed for the dividends to hit approx $18k per year.
So, the moral of the story is that if you are saving up for a specific dividend goal. At some point it will make more sense to just accumulate the cash needed to offset your deficit instead of trying to keep whittling away at it slowly, by investing in your dividend portfolio.
Time is a dividend growth investors best friend.
jh,
Agreed. Time in matters more than timing for the long-term investor. 🙂
As for the deficit, I actually agree. Discussing that idea (via what I called an “auxiliary fund”) was the last post I ever put together on Dividend Mantra. I always thought the side hustle was a better route, but I would have done this if the side hustle option weren’t on the table. There was no way I was going to have a job until 40.
Cheers!
Hi Jason,
I agree with you. Retire before 40 if possible. Time is of essence.
WTK
Amazing job on growing the dividend income.
I didn’t realize you make much more money than your dividends. Seems like you manage to put about $1k in the market every month. Basically you reinvest your dividend income and live off your active (and book) income.
My hat goes off to you.
Gistro,
Thanks so much! 🙂
Yeah, active income exceeds passive income by a rather significant degree. The passive income pays for my life. I invest a portion of the active income, but investing is no longer a priority for me (as I noted). I greatly enjoy investing, but I’m already FIRE. The money is just a means to an end. It’s all gravy from here. So it wouldn’t break my heart or something if I suddenly had to stop investing. But I do hope I can continue out of enjoyment and greater philanthropic firepower down the road.
Cheers!
I own 3 out of the 4 companies you listed that had dividend increases. And of course, they are all the stocks that had double digit growth.
🙂
Sincerely,
ARB–Angry Retail Banker
ARB,
Nice! Glad to be a fellow shareholder. 🙂
Best regards.
What do you make of BUD? Looks oversold….cash machine. I think debt story is overblown. International growth opportunities abound
BK,
I noted in my most recent article on Altria that I think their ownership stake in Anheuser-Busch InBev looks undervalued. That is to say, I think BUD is undervalued. More of an ancillary reason to own Altria than anything else. But since I do own that stake in BUD through MO, I’m not particularly interested in buying BUD stock outright. Moreover, the dividend has been flat for some time, so that’s a consideration for dividend growth investors. With MO, you still get that BUD exposure, but you’re also looking at a higher yield, more dividend growth, and no taxation issues.
Cheers!
Jason, once again, I am inspired (by you). Your annual increase of ‘$134.42, or 1.0%’ covers more than 10% of your nut, just for doing nothing more than staying live, and waking up. Everything that happens after that is gravy or icing, whatever your dietary preferences are 😛 I have started setting goals as well for I think it is good to have something to shoot for. I would love to have $30k / year passive, ~ $100k / year semi-active (working while traveling and looking for my semi-retirement destination), and whatever my retirement accounts do is great until I am at the age where I can access them (8.5 years from now as I turn 51 next week). Right now, I am at ~ $22.5k passive, I have the semi-active nailed, and contribute $44k / year to my retirement, so right on track. My income is going to change 1/1/19 when I hand my business off to another company, so the passive is going to slow down a good bit, but as said, it is good to have something to shoot for. I have to say you have helped me relax around my accumulation of resources, for at the end of the day, they really are just blips on a computer screen / numbers of a statement of account. It is all about what said blips and numbers allow me access to in life, for all the $$ in the world don’t provide friendship, love, amazing experiences, and all that go with them – the true ingredients for a happy and healthy life. I truly hope that your readers take your underlying message away in that everything you have done financially was fertilizer for the garden of life that you have worked so diligently to create, and what a beautiful garden it is! Keep up the great work friend.
Andrew,
Thanks, man. It’s a lot of icing/gravy from here. All I ever aimed for was FIRE, which I knew could and would allow me to live my best life. Still being able to invest a little capital here and there is a total dream. I’m fortunate. The continuation of intermittent capital allocation toward equities is, I now realize, part of me living that best life, but that urgency and priority has been reduced in a big way. If you don’t move toward changing and adapting your priorities a little bit, you’re always going to be bound and controlled by the money – which would be really sad.
I actually met a reader here in Chiang Mai not too long ago. He’s a super nice guy, but he’s just obsessed with money. He’s looking at spreadsheets all day long, thinking about the cost of everything he does, and in search of the lowest COL in the world, even though (as he states) his SWR is something like 1.5%. So he’s clearly financially OK. But the tail wags the dog anyway. And then he also expresses how he looks at all of his “peers” on Facebook still making a lot of money, buying Porsches, etc. This stuff is on his mind. I don’t envy people like that. I’d rather just go back to a normal life/career/job if FIRE were going to be this OCD thing for me. But as I recently shared, FIRE isn’t for everyone.
So I’m glad I was able to help you out with being able to relax. As it sits, you have more than enough. Finding that “enough” is hard for people who are constantly searching and yearning. It requires a major adjustment to reallocate a good chunk of one’s resources toward far more productive endeavors than just the needless accumulation of superfluous money.
Best wishes!
Jason, I couldn’t agree more. I absolutely do have enough… more than enough actually. Thanks in part to your words of wisdom, I have found some levity around the accumulation of material goods and wealth, and am making it more of a game than anything. With that, I find that having goals to move towards is fun vs pursuing ‘loose’ endeavors with no particular outcome in mind. I guess I just like structure in general. Some would say it is my virgo-ness shining through.
Originally, when I started building my portfolio, I put a lot of pressure on myself because I started later in life than most, and I wanted to get off the gerbil wheel of having a job. I was looking at moving abroad, reducing overhead dramatically, and pursuing a lifestyle similar to what you have created for yourself. Well, we plan, god laughs, and I was offered an incredibly opportunity here in the good ole USofA that will keep this as my home base for a bit, and also allow me the freedom to take extended worldwide trips (from 2 weeks – 3 months) to explore and figure out what areas are most appealing for me to return to some day down the line.
I tested these waters 10 years ago when I worked from New Zealand for a month, and it was the best experience ever. Wake up, work a bit, hike up to Mt Doom from Lord of The Rings, and then back to do a bit more work. It was a little challenging to do back then, but things / tech has changed, and it is more possible now by way of all of the digital nomad requiring services worldwide, and all of the places that are fast evolving to accommodate it, like an article I read last nigh about Selina Hostels – https://www.selina.com/. So great.
At this point, I am diversifying outside of dividend growth stocks as I am getting closer to retirement age, and am enjoying learning about other investment vehicles that may not grow prodigiously over time, but do provide a steady stream of income on a monthly and quarterly basis for when I switch over to that model. In the meantime, Thailand is #1 on my Asian list to travel to, and as I have said numerous times in the past, Pad Thai is on me when I get there! Have 2 at those prices!! Enjoy your evening, the sun is coming up here, and it is time to work if my cat will stop laying on my keyboard.
It seems like you added to some good companies, the growth your getting is awesome, 1K every 7 months sounds really motivating. Have you given a glance at ford, its at the 52 week low, and yields 6%, I know the stock price doesn’t go up as much as others, but it looks decent.
EL,
Thanks. It’s been a tremendous ride. And it just gets more and more fun every month. 🙂
Haven’t looked at Ford. Don’t really care for the economics of the industry. And the dividend’s been frozen for some time, last I knew. Not a stock for me at all.
Cheers!
Jason, it’s been inspiring to watch you grow your portfolio over the years throughout this bull run. It’s going to be interesting to see how you manage your portfolio during a recession as the risk free rate continues to rise.
Jesse,
Yeah, a recession and large correction will come at some point. That’s how it goes. It’s a healthy expectation. But how I “manage” (if you would even call it that) the portfolio won’t change. The growing dividend income will pay for my life, and I’ll occasionally buy high-quality dividend growth stocks at appealing valuations with some of my active income.
Cheers!
Jason
Thank you for this post. In my filter Cardinal Health came and it seemed a company with pretty good returns on capital.
Then I saw your write ups about it and had look at the company reports and bought some. I think it will serve the dividend investor quite well.
Regards
Louis
Louis,
Happy to be a fellow shareholder. And happy I was able to provide some perspective. 🙂
Best wishes.
Hey, thank you for sharing very valuable information on dividend investing! I do own some dividend paying stocks, but your blog is inspiring me to make is a more serious strategy.
Just a heads up, by the way: Your Personal Capital referral link does not seem to work. When I click the link I end up on a blank page, but I have no issue accessing the website from Google.
MB,
Happy to share and inspire! 🙂
As for the PC link, it won’t work if you’re in Europe. PC is US only.
Cheers!
Quick question for you Jason.
Knowing what you know now, if you had access to a 401k during your working years would you have used it? I find the idea of living only off dividends intriguing but somewhat at odds with using a 401k which tends to be highly recommended for the tax benefits. If one plans on living off dividends you would in essence have to ignore the value of a 401k and thus would save a lot longer than needed.
Mike,
I had access to a 401(k). So, yeah, I would have done the same all over again. You say you’d have to save longer, but it’s actually the opposite. Every dollar I would have diverted to the retirement account would have been one less dollar toward the Fund I was going to live off of at an early age. Great for the 60-year-old Jason, but not so great for the 33-year-old Jason. There are ways to access that capital, of course, but you’re talking extreme rigmarole.
To each their own, though. If someone else wants to go for the 401(k) (or anything else), more power to them. Run the numbers, then do what makes sense for you. I’m the kind of guy who values time more than most other people (who seem to value money much more). I’ve never recommended anyone to do it like I did it, but I’d say six years from $0 to FIRE on my salary speaks for itself. I’m happy with how it turned out. No regrets at all. 🙂
Cheers!