FIRE Fund Update For September 2019

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.

PURCHASES

I purchased 5 shares of KeyCorp (KEY) on 8/2/19 for $17.07 per share. I purchased another 5 shares on 8/13/19 for $16.54 per share.

KeyCorp is a bank holding company that, through its subsidiaries, provides a range of retail and commercial financial services.

I put forth my investment rationale for KeyCorp not too long ago. So I won’t rehash that.

As I stated in the last couple portfolio updates, my current plan is to continue to accumulate shares in this bank. That hasn’t changed, and I’ll very likely continue to buy shares throughout September.

These purchases added $7.40 in annual dividend income.

I purchased 1 share of JPMorgan Chase & Co. (JPM) on 8/2/19 for $111.98 per share.

JPMorgan Chase & Co. is an American multinational investment bank and financial services company with assets over $2.5 trillion.

I’ve noted a number of times that 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 $3.60 in annual dividend income.

I purchased 1 share of Delta Air Lines, Inc. (DAL) on 8/5/19 for $57.21 per share. I purchased another 1 share on 8/21/19 for $58.36 per share.

Delta Air Lines, Inc. is a global airline company.

I initiated a position in Delta Air Lines last month, and I shared my investment thesis in last month’s FIRE Fund update.

As I laid out then, I planned to buy more shares over the foreseeable future and build the position up. I’ll very likely continue to add to this position over the coming months, although I do see it as being a smaller holding in the Fund.

These purchases added $3.22 in annual dividend income.

I purchased 3 shares of Eastman Chemical Company (EMN) on 8/15/19 for $63.87 per share. I purchased another 2 shares on 8/16/19 for $65.59 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 last added to this position back in early June. There were no plans whatsoever to buy more during August; however, Mr. Market became particularly moody regarding this name, relegating it to the bargain bin. So I went shopping. Simple as that, really.

I always saw this as an ancillary position, though. So I may just end up capping it off here.

These purchases added $12.40 in annual dividend income.

I purchased 3 shares of WestRock Company (WRK) on 8/16/19 for $33.32 per share. I purchased another 2 shares on 8/21/19 for $33.48 per share.

WestRock Company is a leading integrated manufacturer of various corrugated and consumer packaging materials.

Like the Eastman Chemical position, I last added to my position in WestRock back in June. And like with Eastman Chemical, I had no plans to add to my WestRock position in August – or maybe ever.

But the valuation became a bit too compelling to pass up. And with the position being still relatively small, I saw an opportunity to boost the stake by 20%.

Again, though, just like with Eastman Chemical, I see this as an ancillary position in the Fund. It’s a very good business. But it’s not the kind of top-shelf quality that I’d feel comfortable being heavily exposed to.

I don’t currently have any plans to add to this position. But if the valuation becomes even more ridiculous, I might find it difficult to pass it up. It’s already materially undervalued, in my opinion.

These purchases added $9.10 in annual dividend income.

I purchased 5 shares of Leggett & Platt, Inc. (LEG) on 8/23/19 for $37.21 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.

I initiated a position in this fine company a couple months ago, at which time I went over my reasoning.

And I noted at that time that I’d continue to accumulate shares in the business, assuming the valuation stayed reasonable.

The valuation is right in a sweet spot for me, so I took advantage of that opportunity and scooped up a few more shares.

I plan to add to this position in the near future, although I do see this as being more of ancillary holding in the Fund.

This purchase added $8.00 in annual dividend income.

SALES

There were no sales since the last update.

DIVIDEND INCREASES

Illinois Tool Works Inc. (ITW) announced a 7.0% increase in its dividend, upping the quarterly dividend from $1.00 to $1.07. This added $9.80 in annual dividend income.

Altria Group Inc. (MO) announced a 5.0% increase in its dividend upping the quarterly dividend from $0.80 to $0.84. This added $15.20 in annual dividend income.

Bank of Nova Scotia (BNS) announced a 3.4% increase in its dividend, upping the quarterly dividend from CAD $0.87 to CAD $0.90. This added $7.36 in annual dividend income.

FIRE FUND

The FIRE Fund is now valued at $412,851.43. That’s a 0.2% decrease from the last reported market value of $413,833.50.

There are 124 companies in the Fund. That’s unchanged since last month.

The Fund is now expected to generate a total of $14,245.58 in annual dividend income over the next 12 months. That’s an increase of 0.5%, or $74.32, over the prior update’s annual expectation of $14,171.26.

A fantastic tool for tracking your portfolio, progress, and performance is Personal Capital.

CONCLUSION

It was another fantastic month for the Fund.

Really, it’s hard to complain when great businesses continue to do great things and reward me with increasing dividends for their hard work.

It’s a wonderful position to be in.

And it’s a position that almost anyone can be in.

You simply have to take advantage of capitalism.

Don’t let the media’s hyperbole and false narratives make you poor. Capitalism is alive and well, and it’s something that you should be participating in with immense enthusiasm.

While the broader stock market apparently had a volatile August, according to headlines I’d sometimes come across, the Fund barely moved. Other than opportunistically adding to solid companies at attractive valuations, I went about my life while the Fund continued its characteristic plodding ahead.

I can’t think of any major news events regarding any of the Fund’s holdings. A few quarterly reports came in, some of which were better than others. Nothing remarkable, though.

August was a quiet month, overall.

That quietness extended over to the dividend increases.

August is always a slow month for the Fund in terms of announced dividend raises.

This August was especially slow, however, because L3Harris Technologies, Inc. (LHX) announced its dividend raise earlier than usual as it integrates its merger and switches to a new fiscal year.

That left August without one of its usual stalwarts.

But what was left was still more than enough to keep the compounding dividend snowball… well, snowballing. That snowball continues to gain size and speed, even without my help.

I’ll put that in perspective.

The $32.36 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 ~$925 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.

Not too shabby at all.

I remember back when I first started investing, it was difficult to dig up $1,000 to buy stocks. That’s a lot of money. Now I’m able to experience the same result as it pertains to my dividend income, even when I don’t lift a finger. And that’s during a slow month.

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.

I will quickly note here that Altria’s dividend raise marks the 50th consecutive year in which they’ve increased their dividend. That makes them a Dividend King. Pretty amazing stuff.

Looking toward September, 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.

September will almost certainly look a lot like August in terms of stock buys because a lot of the stocks I bought in August are those that I’m actively building up positions in. The notable exceptions would be Eastman Chemical and WestRock.

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!

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).

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!