What a run we’ve been on the past few weeks! Stocks soared after being in the gutter since August. The reason? No one knows! What I do know, however, is the effect the rebounding markets have had on my assets and consequently my net worth. Let’s take a look.
You all know that portfolio size in absolute numbers doesn’t matter all too much for a dividend growth investor. Nevertheless, there’s a direct correlation between the amount of assets you own and the passive income they throw off, so that’s why I like to keep close tabs on my net worth too.
In the beginning of the year net worth growth mostly came from my excellent savings rate, slightly helped by the European Central Bank‘s quantitative easing policy, which is set to continue at least throughout 2016. However, these days it’s mostly Mr. Market that decides wether my freedom fund trends upwards or downwards.
For November Mr. Market decided to bump my portflio over the €70,000 threshold with a massive €4,919 increase, a staggering amount of money in just one month. It’s almost three times more than I managed to save from my October income!
You can clearly see the big spike towards the end of this year in the graph above. It’s a welcome change after the nearly flat numbers from April onwards and a testament to the fact that perseverance and a solid savings rate are by far the most important factors in quickly building wealth.
November’s 7.29% increase brings with it another 410 hours of work-free capital in the bank. With early retirement in mind that’s almost 2,5 months less spent at the office before I can hand in my final notice.
Like in past net worth updates you’ll find a detailed description of my dividend growth stocks, exchange-traded funds and cash below. I also highlight their performance since the time of purchase. Foreign securities were converted to Euros using the last-known exchange rate.
Dividend growth stocks
I previously noted that the value of my dividend portfolio isn’t all that important, but that doesn’t mean I shouldn’t pay close attention to it. After all, when dabbling in individual stocks the importance of focussing on geographic and sector diversification increases. On top of that, I try to purchase into strong businesses that are likely to pay out a stable and growing dividend over time.
Last month I mentioned how my dividend portfolio performed similarly to the exchange-traded funds you’ll find below. Apart from some outliers, that trend seems to continue, which shows once more that daily stock pricing is impacted more by the inherently irrational stock market than the underlying value and business fundamentals of those stocks. Furthermore, it tells me that comparing stocks to a specific index doesn’t hold much meaning.
One of the outliers mentioned in the previous paragraph is natural gas and petroleum pipeline operator Kinder Morgan Inc. (NYSE:KMI), my most recent purchase. The stock was beaten down significantly due to the weak oil and commodity prices, but declined even further after I thought it provided excellent value. It’s true that KMI’s short term prospects are hurting, but I believe the company is available at bargain bin prices if you’re looking to hold on for the long-term.
You can find the gains in absolute and relative numbers for each company in the table below. The cost basis for each position includes the price of the shares, a 0.27% stock market tax and brokerage fees.
|Ticker||Company||Shares||Cost basis||Mkt. value||Gain|
|BLT||BHP Billiton plc||110||1,908.56||1,389.61||-27.19%|
|DE||Deere & Company||7||452.61||496.18||+9.63%|
|HOME||Home Invest Belgium||30||2,682.00||2,761.50||+2.96%|
|JNJ||Johnson & Johnson||20||1,769.41||1,924.21||+8.75%|
|KMI||Kinder Morgan Inc.||50||1,285.19||1,098.80||-14.51%|
|NG||National Grid plc||100||1,332.11||1,355.30||+1.74%|
|PG||Procter & Gamble||23||1,594.66||1,637.66||+2.70%|
|RB||Reckitt Benckiser plc||10||630.34||901.38||+43.00%|
|ROG||Roche Holding AG||5||1,233.71||1,263.07||+2.38%|
|RDSB||Royal Dutch Shell||60||1,745.65||1,437.00||-17.68%|
|S32||South 32 Ltd.||48||20.04||42.11||+110.15%|
|KO||The Coca Cola Company||17||540.05||677.54||+25.46%|
|VZ||Verizon Communications Inc.||20||785.07||852.51||+8.59%|
On top of my dividend portfolio I’m also invested in what I like to call set-it-and-forget-it assets; exchange-traded funds that track the World, European and Emerging Markets indices to be more specific. These funds hold the largest companies worldwide and have performed quite well since I first bought into them in May 2014.
Over the coming months I plan on adding to the World fund as a way to rebalance things a bit and to take advantage of the tax benefits ETFs offer me.
|Ticker||ETF||Cost basis||Mkt. value||Gain|
|IWDA||iShares Core MSCI World||5,214.95||6,629.28||+27.12%|
|IEMA||iShares MSCI Emerging Markets||1,214.59||1,290.06||+6.21%|
|IMAE||iShares MSCI Europe||3,561.94||4,039.20||+13.40%|
Next to the stock market’s upward and downard bursts, this category remains relatively stable since it mostly consists of guaranteed saving accounts. As per usual I added another €77.5 towards the yearly maximum of €930 in my personal tax-advantaged pension fund, while my emergency fund and savings accounts mostly remain untouched.
Regular readers know that I dipped into my emergency fund at the end of August to take advantage of some opportunities in the market, so I’m still rebuilding it to it’s previous level. After all, I prefer to keep a rather large amont of cash on the side.
|Name||Cost basis||Current value||Gain|
|Pension fund||1,705.00||1,878.46||+10.17% and 30% tax break|
And of course I’m saving the best news for last: I cracked the €70,000 net worth goal I set myself for this year with one more month to go! With the performance of the past months in mind, cracking the 70,000 ceiling seemed like a far-away dream, but the past two months really have pushed me forward.
This goes to show that consistently saving is far more important than anything else. Keep your money in your pocket and some time in the future it will start working for you. You will never know when exactly, but you can be sure that it’s going to build your wealth.
Because my assets are growing so fast, the passive income they throw off couldn’t stay behind. As most of you know I already broke my dividend income goal in September, which is just spectacular.
What’s not to love about all of this? Upward and onward!
I often hear how financial independence can’t be done in Europe – due to high taxes, expensive social security, lower income, you name it – but I’m glad to say that I’m living proof that it can be done when you apply yourself. Of course, you’ll need a bunch of luck too, but if you don’t even try and set yourself up for early retirement you’ll never get there anyway.
I sincerely hope you guys feel the same way and and I hope that my report once again invigorated your spirits to reach financial freedom! Thank you for reading.
PS: The dividend income report and savings rate report for October will be added to those of November – I’ve been slacking off posting regularly, I know.