MONTHLY JOURNEY TO FINANCIAL FREEDOM: 52th

In the first half of May/2022, it seemed that we would have continuity compared to last month with investors fearing the advance of inflation and a possible recession in the world economy, mainly for two reasons: fear of the acceleration of interest rate hikes in the United States and the concerns about the Chinese economy, with the lockdowns.

But that fear dissipated over the second half of the month as China eased its lockdowns and restrictions imposed by its zero Covid policy, also announcing new stimulus to the economy, which contributed to the good performance of Brazilian exporting companies.

And, the main Brazilian index, composed mostly of exporting companies, closed the month with a rise of 3.22%, being, however, behind the index of dividend-paying stocks, which closed at 4.26%. As for my portfolio, as it is more focused on the domestic economy, there was a slight increase of 0.98%.

In the year, my portfolio has a return of only 2.10%. But that's just out of curiosity, as I don't care much about profitability, because what interests me is passive income. I also emphasize that the profitability presented here is not incorporated with the dividends received.

This month, I fixed some errors in my spreadsheet that I keep to keep track of my investments, so some data might look different from other months. In addition, when submitting the income tax return, I noticed that I had not registered a purchase order for 100 SAPR11 shares in the amount of R$18.47 each.

POSITIVE AND NEGATIVE HIGHLIGHTS OF THE PORTFOLIO

TUPY3 was once again the positive highlight of my portfolio. On the negative side, foreign assets led by PK stand out.

BUY SELL

In this month of May, I started to get rid of my position in GRND3, behold, the results of the first quarter of 2022 did not please me. In fact, since 2018, the company's results have only gotten worse. It seems management is passively watching this get worse, while their peers only get better (ARZZ3 and VULC3). I sold 1,000 shares at the price of R$ 9.75.

And another company I sold was FB. As I wrote in the last report, I shouldn't have bought it, as I want to focus on companies that generate income or have the potential to generate income. I sold it for $212.00, which represented an approximate profit of 12% in two weeks.

With the sale of GRND3 shares, I took the opportunity to buy more shares of AESB3, whose company I haven't stopped buying since August/2021. I bought 1,100 shares at the average price of R$10.78, thus totaling R$11,861.00. As a result, I now have 11,662 shares at an average price of R$11.18.

Another one I keep buying is the FLRY3. I took advantage of the market downturn in the first half of the month and bought another 500 shares for R$14.04 each, totaling R$7,021.00. Now I have 5,100 shares at an average price of R$16.89. Note: here was one of the errors fixed in the spreadsheet, behold, with the purchase of 500 shares, I should have gone to 4500 shares based on last month's data, but the formula was wrong, so I corrected it, passing, thus, to have 5100 shares of FLRY3.

With the market crash, I also took the opportunity to buy more bank shares. I bought 100 ABCB4 shares worth R$15.71 each and 800 ITSA4 shares worth R$8.82. As a result, I now have 3,607 shares with an average price of R$14.47 in Banco ABCB4 and 11,920 shares in ITSA4 with an average price of R$9.13.

And going to the foreign market, I bought: i) 20 ARVL shares at USD 1.41; 01 DIS share at USD 102.27; and, 01 MMM share at USD 141.30.

So, in May/2022, I made BRL 29,731.49 in contributions and BRL 10,813.41 in sales.

NEXT ACQUISITIONS/SELLS

If next month stock prices are below or stay the same as May 2022 close, I will possibly buy with the following companies:

In any case, I believe that, in the next month, I will possibly buy those companies that pay a dividend greater than 6% and that the current prices are far from the highest price of the last 52 weeks; or, even if the company is not within the 6% price ceiling, the stock is at the recent lows of the last 52 weeks and has the potential to generate dividends further down the road.

So I'm thinking about buying more DIS and MMM, as long as they are priced at the latest or within the 6% ceiling price.

Possibly, I will buy some more from PK. In fact, I missed the opportunity to buy more of it when it plummeted to nearly $16.00 this month.

However, as for AESB3, contrary to what was stated in the previous report, the company did not disclose any distribution of earnings, mainly because it has invested a lot of capital focused on electricity generation that is not exclusively from water sources. I will continue to buy it, but it may be that the market hits it, so I will buy it again if the price drops to less than R$ 10.21 or if it is the only contribution to make in the month.

As for eventual sales, I will continue to sell the GRND3 shares little by little, as the price continues to rise, but in the meantime, I will follow the next results. I must do this through selling puts. NFLIX is another one I will surely sell once the price goes up again.

I'm just thinking about selling my uranium ETFs little by little, as I bought it only as a speculator. I also think about selling other ETFs: VOO, NOBL and VNQ. That's because my average prices are far from the 6% average prices: VOO (price: USD 275.45, ceiling price: USD 84.72), NOBL (price: USD 66.13, ceiling price: USD 25.16) and VNQ (average price: USD 101.93, ceiling price: USD 54.93).

I will also sell hotel companies, as long as they are not within the 6% ceiling price, which excludes the sale in PK (average price: USD 18.45, ceiling price USD 23.10) and BHR (average price USD 5.00 , ceiling price USD 6.80). Perhaps, I will still keep APLE, as the prices are very close (average price: USD 13.39, ceiling price USD 13.10). But, I will sell: XHR (average price: USD 17.37, ceiling price: USD 12.83) and HST (average price: USD 14.22, ceiling price: USD 9.83).

Based on the comments above, I've scheduled the following orders until they're cancelled:

- Purchase order: 01 DIS share at USD 99.72;

- Purchase order: 04 PK shares at USD 17.01;

- Purchase order: 200 shares of FLRY3 at R$ 14.37;

- Purchase order: 400 shares of AESB3 at R$ 10.21;

- Purchase order: 500 ITSA4 shares at R$8.81;

- Purchase order: 200 ABCB4 shares at R$ 15.66;

- Sale order: 02 shares of URA at USD 22.61;

- Sale order: 01 URNM share at USD 72.21;

- Sale order: 06 XHR shares at USD 20.99;

- Sale order: 02 shares of HST at USD 21.59;

- Sell order: 01 VOO share at USD 402.44;

- Sale order: 01 NOBL share at USD 95.23;

- Sell order: 01 VNQ share at USD 109.01;

- Sell order: 01 NFLX share at USD 220.23;

- Sale order: 2300 shares from GRND3 (selling puts GRNDH110 at R$ 0.35);

PASSIVE INCOME

This was the second best month in terms of receiving dividends. I received BRL 10,924.92.

This month, from just two companies, I received more than 11% in yield on cost each, which shows me how good it was to have bought TAEE11 and ENBR3 back in the day. TAEE11 paid R$6,039.96 in dividends corresponding to a yield on cost of 11.91% after tax, while ENBR3 paid me R$4,083.48, which represents a yield on cost of 14.86% . That's why it's important for me to respect the safety margin: buy a company at the lowest prices or respect the 6% ceiling price.

I also received BRL 357.99 from GRND3, equivalent to 2.10% of the year, but I could have received BRL 513.64 if I had waited to sell it after the cut-off date. I was wrong!

They also paid me KLBN11: BRL 440.18 - 2.15% in yield on cost. and APLE: BRL 3.30 - 0.22% in yield on cost.

NEXT DIVIDENDS

At the end of May, I already received the amount of BRL 26,229.10 in passive income in 2022, which generates an average monthly income of BRL 5,245.82 in these five months of the year.

However, I still have to receive BRL 3.987,95 in dividends from the following companies: MDIA3, SAPR11 and APLE.

EQUITY

I ended the month with a net worth of shares of R$ 1,030,712.89, a value higher than last month. In fixed income, I ended the month with a balance of R$ 105,785.03, which is lower than last month, behold, in addition to the contributions made, I also withdrew R$ 5,000.00 to pay my extraordinary expenses.

So, at the end of the month, I ended up with an equity of R$ 1,136,497.92.

ALLOCATIONS

My portfolio no longer has 29 risky assets. My portfolio now has 28 assets, due to the sale of FB. But, as stated in the last report, I am decreasing the amount of my assets, especially regarding foreigners, as I will only keep those that generate passive income or have a great potential to generate passive income. So, as far as foreign assets are concerned, I want to stay true to the dividend strategy.

I emphasize, however, that the only one that escapes this reasoning is the ARVL. I really like the concept they are bringing to the market, so I think about having 1% of it in my portfolio, which corresponds to R$ 10,000.00 or USD 2,000.00.

MY GOALS

My goal for this year is: i) to reach R$ 1,000,000.00 invested in shares; and, ii) receive R$ 45,000.00 in passive income.

Well then! At the end of the month, I ended up with a capital invested in shares of R$ 892,153.59

And I also ended up with a passive income accumulated in the year of R$ 30,217.05 (graph below), including dividends that I will still receive, thus representing a return on cost of 3.39% (graph above).

It can be seen, therefore, that I am getting close to my goal of one million reais invested in variable income, behold, considering the amount I have in fixed income (BRL 105,785.03), I would need more BRL 2,061.38 to reach the goal. But of course my goal is to have a million invested, so I need the stock market to continue helping me, that is, for the stocks to fall in price so I can invest what I have in my passive income.

And as for passive income, despite still being far from my goal of R$ 45,000.00, I see that my strategy is already having an effect, because, with the amounts that I will still receive in 2022, I am already reaching the same value I received last year from passive income (amosto R$ 31 thousand - R$ 30,812.51):

Keep going!!!!