February 2018 Independence Fund Update


What a month February turned out to be! Volatility has returned back to the market and it seems that it is here to say. It has been an absolute roller coaster of a month with the market not able to decide where it wants to go. It has been a good thing for us dividend investors because it allows us to buy in at a higher yield.

However, Despite being able to purchase into companies at a higher yield, it's never easy to watch my portfolio take a dip from $66,000 to  $59,000 in a month. I'm not at all worried about the safety of these companies or my funds because temporary dips along the way are normal and expected.

I had a lot of portfolio developments happen last month. A few big things included purchases and a record amount of dividend increases that really helped boost my annual expected dividend income. I also trimmed a rather large position in my portfolio by 70% which really hurt my annual expected dividend income. You can read more about that cut in the link above. 

It wasn't all doom and gloom in the market last month as four companies offered me above expectation pay raises! This really put a smile on my face because I didn't have to invest a single penny more in order to receive this amazing increase!

  • PEP announced a 15% dividend increase $10.58
  • TROW dividend increase by 23% $19.98
  • ABBV dividend increase of 35% this alone was an annual increase of $34.97!
  • WMT dividend increase of 2% affected my dividend income by $2.08

This added up to $67.61. If I would want to replicate this success, I would have had to invest close to $2,000 at a yield of 2%. This absolutely blew me away and really showed me to the true power of dividends. 

I received payouts from 8 companies last month totaling $272.56 which was an increase of 290% over last February. This is a major increase and I expect the rest of the year to show similar returns. I have heavily into 3 monthly dividend paying companies which will help smooth and boost my monthly averages to a more consistent trend. 

Going into another big success for the month, I posted a fantastic monthly expense number. I have been trying really hard to not purchase anything unless needed to help increase my monthly savings rate so I can shovel as much capital into the market as possible. Spending less is one of the most effective ways that this can be done. It seems like a no brainier but is harder in practice then theory. Coming down from holiday expense highs, I really wanted to a make a bigger impact early on and get a rein on my holiday spending.

I'm going to strive to post months as close to this as possible and will be tracking it every step along the way. If I can bring my average monthly expenses down from where I'm at currently to where I want to be, I'll be able to add an extra $600 of capital per month which will go a long ways into making a dent on my goal. 

Monthly Expense = $1,995

All the success of last month brings me towards the hardest part of this update. I was able to keep my head above water which is a great thing but, I was very far off from my monthly account growth average goal. I need to maintain over a $3,000 per month growth goal in order to hit my lofty goal of $100k by years end. Last month was an absolute nightmare for overall market valuation and I took some big dives on current positions. I still managed a $990 increase last month or a 1.7% increase which is still amazing just, not my goal. Overall, the graph is headed in the right direction and I know that this pull back allows for a nice loading zone. I'm hoping to get as much capital into the market as possible before wall street decides to run these stocks higher. 

February was a rough second month to the year in terms of market valuation but it had it's silver lining for sure. My positions continue to pay me a steady stream of dividends and I'm gaining pay raises along the way. Every little bit adds up down the road and I have every intention to continue this journey full steam ahead. I still reflect on how 2 years ago I didn't have a portfolio of this value to call my own. These self reflections is what truly brings me back on track to reaching my goals and ignoring the minor turbulence along the way. I think it is easy for me to get caught up on overall market value instead of focusing on the bigger picture of dividends.

After trimming my OHI position it really brought me back on track to continue to bolster positions in my portfolio that are solid long term dividend payers that offer increases. It's easy to get focused on companies offering higher yields but in the end it's not worth it for most. I'm going to continue to invest capital into companies that reward their shareholders such as PEP, TROW and ABBV. These companies announced some of the biggest increases I have seen and I'd like to be on their side with larger positions the next time another round of increases are announced.

This doesn't mean that I won't be taking advantage of solid companies that are beaten down offering a higher yield, just that I'm going to be a bit more careful into which companies I'm putting my capital into. I'm excited for what this next month is going to bring and thanks for reading my update for last month.