My Full-Time Fund is my dividend growth stock portfolio. I think it’s an apt name for it, because it works full time so I don’t have to.
Indeed, the Fund generates five-figure dividend income for me that, when combined with other sources of passive income, allows me to choose my endeavors not based on money but rather happiness and purpose. And that is, in my view, how life should really be lived.
The Fund has undergone a lot of changes over the years, changes which I’ve documented as much as possible along the way. And it’s in that spirit of openness and transparency that I continue revealing to the world exactly where I’m putting my money to work (and keeping my money at work).
I’m incredibly proud of the collection of stocks that now make up my portfolio. These are really fantastic businesses. And I’m very happy to own a very small slice of all of them. They have competitive advantages that allow them to, over longer periods of time, grow their profit and dividends, which in turn grows my wealth and income.
My main goal with the Fund, however, is to grow my passive dividend income. Stock prices go up and stock prices go down (I usually prefer the latter), but it’s really the dividend income the Fund generates that is the backbone of the financial freedom that affords me my lifestyle.
So I’ll go over the transactions from the prior month, showing what I bought (or sold), along with a little discussion on the thought process behind these transactions.
My first transaction of the month was a sale, which is unusual for me. I don’t sell stocks often, but I am active in terms of managing the portfolio so as to make sure that positions are right-sized for my needs.
I sold 15 shares of Albemarle Corporation (ALB) on 10/10/16 for $83.36 per share.
I first loaded up on Albemarle when its stock was priced in the $40s. I thought the risk was worth the reward at that particular point, with the valuation appealing, the yield pretty decent, and the future prospects (especially in regard to lithium) bright.
In all honesty, it’s not a prototypical dividend growth stock due to the cyclical nature of the business and the low starting yield, but I think it’s a fine business. Moreover, Albemarle has increased its dividend for 22 consecutive years, so it’s no new kid on the block.
While I still like the company quite a bit, the stock’s rapid appreciation from my cost basis meant the position became relatively large for the Fund.
With the business being fairly cyclical, the stock offering a ~1.5% yield, and the most recent dividend raise being somewhat disappointing, I felt it prudent to lighten up on this stock just a bit.
With the position now being right about 1% of the portfolio, I feel more comfortable here.
This sale reduced my annual dividend income by $18.30.
I then used some of that capital to purchase 20 shares of Southern Co. (SO) on 10/10/16 for $49.36 per share.
Southern’s 4.5% yield is attractive in this environment. And I don’t think the valuation is totally crazy now, at about 20 times earnings for the stock, as the company continues to make some strong moves toward cleaner energy sources.
Southern is one of the more consistent dividend growers out there, with 16 consecutive years of dividend increases.
The utility isn’t going to hand out monster dividend raises year in and out, but this is a stock that nicely balances the portfolio. Southern is a stock that provides that current income for me, balancing out a lot of other holdings (like ALB above) that should provide a lot more income growth over the long haul.
This stock is now just under 1% of the Fund, and that’s a level I feel pretty comfortable with. I’ve never been a huge fan of utilities in general, but I do think Southern’s increasing foothold in natural gas infrastructure is appealing, as is their increasing presence in solar.
This purchase adds $44.80 to my annual dividend income.
I then finished this month up by purchasing 30 shares of Chatham Lodging Trust (CLDT) on 10/17/16 for $17.85 per share.
Lodging is heavily cyclical. No doubt about that. And Chatham’s “tenants” essentially sign very short-term “leases”, which severely limits the company’s predictability, as well as the dividend’s reliability.
Nonetheless, the business is very cheap right now, in my view. Chatham’s AFFO mid-point guidance for this fiscal year is $2.29. So that means the stock is trading hands for less than 8 times that mark. And since the monthly dividend is $0.11, the dividend coverage is quite strong.
There are some risks to keep in mind here, but the valuation and 7.50% yield might just be worth the stretch over the long haul. The major risk I see is a recession, though that’s a risk for most businesses.
This purchase adds $39.60 to my annual dividend income.
Lastly, I received 10 shares of Versum Materials Inc. (VSM) this past month as a spin-off from Air Products & Chemicals, Inc. (APD). This is a new position. The stock currently pays no dividend. However, it’s a tiny position. So unless I have a very good reason, I’ll probably just sit on it. It’s not economical to do anything else with it right now.
Looking at the activity over the month of October, I’m pretty happy. I was a bit busier than I really like to be, but ALB’s rapid price appreciation left me uneasy, as the position became a little bigger than I had in mind. Reducing that exposure while simultaneously increasing my dividend income is a win-win.
Netting everything out, I added $66.10 to my annual dividend income.
So my lifestyle looking out over the next 12 months is looking just that much better.
The Fund is now worth $301,857.85, and it’s spread out across 105 positions. That’s a 2.5% decrease from last month’s published value of $309,692.20. The Portfolio page has been updated accordingly.
This is one of the larger decreases that I’ve experienced over the course of my six or so years of investing. I’ve noticed that many higher-yielding stocks (especially REITs) have dropped fairly dramatically over the course of the last month. Since I have plenty of exposure there, the value of the portfolio naturally responded. However, my passive income continues to just march along, though recent moves (as noted above) have allowed that march to speed up just a tad. And that’s what I care most about.
Looking forward, I plan to make at least one stock purchase this month, although that’ll really depend on capital needs. I continue to divert free cash flow toward philanthropic giving, which is proving to be just fantastic. At the same time, my passive income just barely covers my core personal expenses, so I appreciate opportunities to bolster my annual dividend income so as to create a larger buffer. Stocks like VF Corp. (VFC), Cardinal Health Inc. (CAH), Williams-Sonoma, Inc. (WSM), and AbbVie Inc. (ABBV) all look attractively valued, while I also have room for any/all of them in the portfolio. As such, they all remain on my radar.
As a final note, I recommend using Personal Capital to manage your portfolio. It aggregates your accounts, and gives you powerful visualizations that are actionable. The best thing of all is that it’s free!
How was October for you? Took advantage of some opportunities? Dividend income growing to your expectations?
Full disclosure: I’m long all aforementioned stocks.
Thanks for reading.
Image courtesy of: bplanet at FreeDigitalPhotos.net.
Hi Jason – pumped that you are still providing this much detail on your portfolio. I’ve always really enjoyed these updates. Like you mentioned, I saw a lot of holdings come off in infrastructure and REITs and I’m taking a really long look at some high quality companies in this space.
I may have missed it, but I’d love to hear about how you manage to stay on top of so many holdings. With 100+, how do you track the prospects for so many companies?
ADI,
Hey, I’m happy to share! 🙂
Yeah, I actually have some room for some of the REITs that have recently dropped. However, I also notice some have simply moved from very expensive to less expensive, meaning the valuations still aren’t quite there for me. But we’ll see what the future holds.
As for managing a large portfolio, I have covered that before:
http://www.dividendmantra.com/2014/11/is-managing-a-large-dividend-growth-stock-portfolio-time-consuming/
Thanks for stopping by!
Cheers.
Sounds like you’re having a great month. I am not even one year into building up my dividend portfolio, so for me its less about little adjustments and more about getting all the great companies on my list. This month its 3M and an australian bank, which should add around 150 australian dollar to my annual dividend income, getting me close to 200 AUD$ per month. Love it!
Thanks for the update!
Martin,
That’s how a large portfolio is built. It’s just one investment after another. Those incremental steps add up over time. $200 AUD begets $300 AUD begets $500 AUD. So on and so forth. 🙂
Keep it up!
Best regards.
Good day Jason
I know how it is my portfolio is down also for the month. But my dividend income is up also for the month. That’s a great feeling. More income for me means more security for a comfortable retirement. I don’t want to have to worry about not having enough income to provide for me and my wife, when we get to retirement. Glad to see your income is up as well. The full time fund still looks well diversified and full of great stocks. So the future of the full time fund looks so bright to me even though value is down currently for the month. I have been reading your blog so it looks like you are doing quite well down in Sarasota FL. It is inspirational to read what your able to do now that your full time fund is providing this great income for you. Please keep us updated on the full time fund and stock ideas.
all the best Michael
Michael,
Thanks for all the support!
Right. I’m not exactly sad about the value of the portfolio dropping. As I’ve noted before, I almost always prefer stock prices to drop (rather than rise). If I’m not buying, the company most likely is. Although REITs aren’t as favorable for me in regard to price drops, I have some more room for many of these names, so I wouldn’t mind seeing some lower prices in that space.
I hope things are working out just as well for you. We’re all very fortunate here. 🙂
Best wishes!
Jason,
Its been inspirational following your progress. Keep inspire all of us. Great to see your progress. Its amazing to see how consistently investing in DG stocks help achieve early retirement.
Thanks for sharing cheers 🙂
Dividend Pursuit
DP,
Thanks for the kind words. To be able to inspire so many people to reach for the stars is a dream come true for me. Having that kind of a positive impact on people is something I want to continue for the rest of my life, even if it’s one day no longer in this type of forum.
Hope all is well!
Cheers.
Hello Jason,
concerning your Versum Materials Inc stock.
I understand that the are no cons of keeping that stock in your portfolio but should you reallocate these capital to acquire more dividend generating stocks instead ?
LD,
Reallocating the capital toward a dividend growth stock is definitely what I’d like to do, although it remains to be seen as to whether Versum will itself become one. It’s a brand-new independent company.
That said, it’s a very small position, worth only a couple hundred dollars. So the economics of selling it aren’t terribly favorable. I’m still contemplating that one.
Thanks for stopping by!
Cheers.
Sounds like you’ve been doing more selling than what you have been in the past few years. Any reasons for that?
Tawcan,
Well, I now have about double the portfolio (both in terms of number of positions and total amount of the portfolio) I had just a couple years ago, so it’s all relative. One sale for a 25-stock portfolio is the same as four sales for me. Relative to what I see with a lot of “buy-and-hold” portfolios like you see at Berkshire and Markel, I don’t sell much.
Specific to this month, Albemarle became too large for the portfolio. That was because the stock almost doubled in a very short period of time, which also had the effect of lowering its yield to a rather unappealing level for me (especially considering recent dividend growth).
Cheers!
Jason,
VFC and CAH are also high on my watch list now. Nike appears to be attractively valued right now, as well. Low yield, and the dividend history not as robust, but the earnings quality is truly fantastic. Thoughts on NKE?
Guy
Guy,
Nike is a fantastic business. I’m not sure it’ll grow as fast moving forward as it has in the past due to increased competition, but it should still provide for great returns, assuming the stock is bought at a good valuation.
I’m personally not sure I have room for it, as I already have a lot of stocks that don’t exactly pull a lot of weight in terms of current income (V, SBUX, the aforementioned ALB, etc.).
Best regards!
Jason,
Damn son, good to see you’re still kicking the tires. Looks like the portfolio is a little bigger than I last recall. I understand the sale on ALB, they are up a super lot. That being said I just went long on some Westlake (WLK) last month, I think that one has a better valuation and potential over ALB at current valuations – worth a look on the CCC list. Anyways good to see you back.
– Gremlin
Gremlin,
Ha! Yeah, still kicking the tires. 🙂
WLK is interesting. I believe that’s more of a pure play on chemicals, whereas I really got into Albemarle because of their leading position in lithium. Similar yield and both recently increased their respective dividend by about the same amount, so that’s kind of funny. Morningstar has ALB as significantly undervalued right now, but they have WLK as significantly overvalued. I guess we’ll see how it all turns out!
Best wishes.
Interesting. I think Morningstar maybe did not take into account that WLK made a huge purchase recently, (taking on some debt), but growing by at about 33%. They are huge in PVC piping and some other products – and in my experience we need a lot of that stuff because our infrastructure is approaching 100 years old in many parts of the US.
Just doing a quick look at them both I see WLK’s P/E is significantly lower than ALB. I don’t have FAST Graphs, but if you do its probably worth a comparison there. Either way, not keeping a big materials sector myself.
– Gremlin
Gremlin,
Morningstar mentions the Axiall acquisition in their analysis. But if there’s something else that’s come in just over the last month or so, I don’t believe they’re including it. It looks like Morningstar is forecasting less growth looking forward, so we’ll have to see how that turns out. That said, Morningstar is just one analysis firm, so you should really trust your gut/analysis above all. If you think it’s a fine investment, that’s all that really matters.
I wouldn’t directly compare their P/E ratios, however, because they’re really not that similar. Westlake’s five-year average P/E ratio is significantly lower than Albemarle’s, indicating that the stock usually goes for a cheaper valuation. I personally much prefer the lithium side of things over just straight chemicals, but to each their own. And I thought it was a great investment earlier this year (but less so now). So far, so good. 🙂
Cheers!
Nice update Jason. I remember when you first crossed the $200k line so it’s great to see that you’re now over $300k! I think a lot of stocks are going to look more valuable soon, time to get the wallet out 🙂
Tristan
Tristan,
It’s definitely psychologically rewarding to see a ‘3’ handle there instead of a ‘2’ handle, but that’s pretty much it for me. As long as the dividend income more or less remains intact, or, better yet, continues to grow, I’m a happy camper. 🙂
I see a lot of stocks that are a lot cheaper than just a few months ago, though many are still expensive in terms of historical levels. Nonetheless, I’m hoping I can get in a buy this coming month. Should be fun!
Thanks for stopping in. Hope all is well!
Cheers.
Great work Jason. I’m very stoked to see your charitable interests activity and desires increasing! That is very cool, and something I talk about on my site as well. Keep it up. Before you know it, you’ll be at $400k!
PID,
Oh, I’m super excited about where things are going for me in regard to philanthropy. I actually foresee the last 1/3 of my life dedicated to volunteering. And the more I go along, the more I think about dedicating more time (rather than just more money). I have some very big ideas for all of that. A lot of fun!
$400k will come, as will $500k, and so on. I’m definitely not saving and investing as aggressively as I used to, but that’s only because the urgency isn’t really as strong as before. Still having a great time with it all, though.
Best regards!
Jason,
Love following your progress! A couple comments, questions:
I went to sign up at Personal Capital, and chickened out when I had to link my Fidelity and Schwab accounts. Am I over-reacting? Looks like a great tool. Thank you.
How/where do I follow your monthly dividend income? Would love to witness your growth 2011 versus now dollars.
All the best to you, and yours.
RTM,
I guess you’ll have to really decide for yourself if you feel comfortable with linking your accounts with Personal Capital. I feel comfortable, as they use the same security that all of your other accounts use. In my view, one is either comfortable with online banking/investing in general, or they’re not. I don’t know why one would feel uneasy with Personal Capital but not with, say, a Fidelity account. But to each their own. Just to note, they do have some extra mobile security (like Touch ID) available. So that might make you feel more comfortable. But if you’re uncomfortable, it’s probably better just to not use it.
As for dividend reports over the years, you can see all of those I published over at Dividend Mantra here:
http://www.dividendmantra.com/category/dividend-income-update/
Cheers!
Jason, another amazing month. Way to go! Question: Do you have any preliminary thoughts on YUM and YUMC spinoff? Planning to keep your YUMC? I’m personally not sure yet. Will likely only keep YUMC if they plan to have a strong/growing dividend. Otherwise, may sell YUMC and invest proceeds in YUM. Disclosure: I own YUM and YUMC. Wishing you all the best, my friend!
Ian,
Thanks for stopping by!
My initial inclination is to hold YUMC. It’s arguably the better end of the deal, and I imagine we’ll see some growing dividends come our way in time. There have been a lot of spin-offs lately, some of which I’m not terribly excited about, but YUMC might be one of the best ones of all. That said, if YUMC stubbornly refuses to pay a (growing) dividend, I’ll probably have to move on. I’m going to give it some time.
Hope all is well with the family!
Cheers.
Great update as usual. Looks like you have been quite busy with some selling and buying in your account. As you said, stock prices go up and stock prices go down but that passive income just marches along. So true. Like you I plan to keep my VSM stock for now. To date, I have kept every spin off received but may sell one day if it’s just cash sitting there not generating a passive income stream. My portfolio saw quite a few new additions via spin off in recent weeks. VSM from APD, YUMC from YUM, QCP from HCP and ADNT from JCI. It’s funny watching a portfolio gain additional names without having to lift a finger. Since I started, ALLE from IR joined, HYH from KMB, CCP from VTR, MDLZ from KRFT (now KHC) and ABBV from ABT. Looking at potential buys this month I outlined many of the same names you are considering with ABBV, CAH and VFC all making the cut. Thanks for sharing.
Keith,
Indeed! It’s fun watching the snowball grow without doing anything at all. That pertains to new dividends, dividend increases, and those great spin-offs. These new positions could end up being great little dividend machines in their own right, but time will tell. Just part of the fun. 🙂
Thanks for stopping by. Have fun with your stock shopping this month!
Best regards.
Have you looked @ AGN lately? issued first quarterly dividend. Trading at an attractive valuation???? thinking of adding. Anything in the healthcare sector have been hit hard of late. Thoughts, thanks.
J-harr,
That stock isn’t on my radar at all.
Best of luck, though!
Cheers.
I am watching DIS and VFC too. But what is really piquing my interest right now are the drug companies. ABBV, AMGN, and distribution type companies ABC and CVS are all screaming at me to buy right now. I think it is due to political pricing pressure in the election year with recent news coverage and will eventually die down. Buy when blood is in the streets and the masses are screaming for their heads, right? Starting to average in here on that hunch. If they go lower, I still get pretty good yields to wait it out.
REITs have been getting smashed lately, but like you said, they can get even lower with interest rate concerns, as now they may just be “less expensive” rather than cheap. I would love to add more O, but can’t pull the trigger until it is at least a 5% yield.
The one other stock I am really wanting to drop a bit more is NSRGY. Been wanting to buy more Nestle under $70 for a while now to increase my exposure to global consumer staples, and it is getting awfully close!
One great thing for me right now is I have free trades now after switching brokers, so I can nibble at a lot of different things that I feel are undervalued gradually without incurring transaction costs. That has been a big help in slowly averaging into new positions!
Keep living the dream Jason!
Daniel,
Yeah, I have the same thoughts. The REITs have been dropping like rocks lately. As have many healthcare names, especially those heavily exposed to pharmaceuticals. I actually already submitted my article for DTA for this weekend, which covers a company in that space. Nestle is also pretty interesting. I’ve noticed a few international consumer companies (NSRGY, DEO, UL) have dropped quite a bit lately. All good opportunities, in my view.
Happy shopping over there!
Best regards.
Your watch list for this month is close to mine. I’m really loving the value of ABBV currently. They just announced a healthy dividend increase of 12.3% which is really going to bump that yield up nicely. I have the capital ready to go but I’m a little worried about this election and how it will affect the market though. I’m trying to decide, buy in now when the price appears good or could we have a better opportunity next week?
dd,
Yeah, that dividend increase combined with the recent drop has pushed ABBV’s yield past 4.5%, which is pretty appealing. You have that reliance on Humira and a balance sheet that could be improved, but it’s otherwise a pretty stellar business. I’m definitely enjoying that pay raise. 🙂
Thanks for stopping by!
Cheers.