Tuesday, November 6, 2012

Dividend Mantra's Freedom Fund Update - November 2012

Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it's aptly named. My portfolio is my way to freedom; freedom from working at a job I don't enjoy to purchase goods I don't need to impress neighbors I don't care about.

I feel extremely fortunate and thankful that I'm able to post these updates every single month which shows the power of monthly contributions to investments because of the high savings rate I maintain. It shows how a relatively large sum of money can be built through the power of time, patience and perseverance.

It's important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.

My Fund has experienced what I believe is the first monthly decline in overall value between monthly updates here on the blog. This is due to a number of different reasons. First, the overall market has been bearish over the last month and the S&P 500 is down 2.24% over the last 30 days. I've experienced some particular weakness in certain positions with Intel Corporation (INTC) down 4.94% over the last month and Norfolk Southern Corp. (NSC) down 4.81% over the course of October. Second, I didn't contribute as much as usual in terms of new capital due to other personal needs (cheap alternative transportation). Also, October was a light month in terms of dividends received.

It should be noted that as my portfolio grows in value, market gyrations will have larger overall effects on my portfolio's value than my capital contributions and dividends received. Again, the portfolio value is of secondary concern to the income it generates.

The current market value of the Freedom Fund now stands at $81,043.57. This is a slight decline from the last published value of $81,101.40. I plan on taking advantage of the recent market weakness and do plan on investing a larger amount of fresh capital than usual during the month of November. I'm very excited to go shopping!

There were a number of changes made to the portfolio over the last month. I completely sold out of my Total S.A. (TOT) position and used this capital to initiate a new position with Lorillard Inc. (LO). I also added to my position with Kinder Morgan Inc. (KMI) during the month of October, bringing this position up to 100 shares. Overall, I'm very pleased with the changes made here. I don't sell often, as any regular readers know and so my sale of TOT came after much thought. It was right as it does not fit my strategy of investing in businesses that continue to pay me higher dividends year after year. 

I'm currently still invested in 29 positions. I sold TOT, but quickly initiated a new position in LO.

These updates are mainly designed to show the increase in the value of the underlying equities I'm invested in, but the main purpose of investing in dividend growth stocks is for the rising stream of dividends over time. So, with that said I don't put too much emphasis in these monthly updates on the value of my portfolio. I think it is a good idea, however, to keep track of the rising (or falling) value of one's securities and be aware of where they are in terms of the marketplace and whether or not certain stocks are attractively priced or not. It proves to be a useful exercise, for me at least, to update the values monthly. It gives me fresh perspective on which equities are performing well and which aren't, and from there I can make educated decisions (based on further due diligence) on which stocks I'd like to add fresh capital to (while considering portfolio weight as well).

Full Disclosure: Long INTC, NSC, LO, KMI

How are your portfolios doing? Using the market drop to your advantage?

Thanks for reading.

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