The halfway point of the year has already past, so it’s time to check if I’m on track to meet/exceed my 2020 Portfolio Goals.
The pandemic has offered some serious headwinds to meeting my goals this year, but I’m not giving up yet. Thankfully, there’s still time to make adjustments, if needed.
I set 5 Portfolio goals for 2020. It was one investing goal, two dividend goals, and two bonus goals.
I’ll briefly review them here, but see my 2020 Portfolio Goals post from this past January for all the details.
So, let’s see where I stand on reaching those goals before the year gets away from us…
Revisiting my Portfolio Goals for 2020
1) Invest at least $10,000 of new capital in the Portfolio
This goal was identical to one of my 2019 goals. As it turned out, the amount I targeted was on the high end of a $6K-$12K investment range that felt comfortable to me.
Given the market declines in late Q1, you’d think I would have invested a good chuck of my capital, but that was not the case.
I did have a net investment of new capital in the first half of the year, but it was less than half of my $10K target. Most of my purchases came on the heels of some sales, and it was more re-allocation of funds, as opposed to investment of new capital.
All totaled at the halfway point, I’ve invested $3,135.12, or approximately 31% of my goal.
If you tally up my transactions from the first half, I made 33 purchases and 15 sales. That’s quite of bit of activity for a net investment of a little over $3K.
PROJECTION –> TO BE DETERMINED… BUT I’LL HAVE TO PICK IT UP IF I WANT A CHANCE TO REACH MY GOAL
2) Reach $12,500 in annual forward dividend income
I kicked off 2020 with a projected annual dividend income of $10,804.29, and reached $11,603.11 by mid-year – about a $600 gain. This is a smaller gain than I posted at the same point last year.
If I duplicated my first half effort in the second half of the year, I’d crack the $12,200 mark for forward dividend income, but would fall short of my goal.
The good news is that if I reach my investment goal for the year (see goal #1 above), I will have invested over 69% of my planned investment capital in the second half of 2020, and that should help boost my forward dividend income towards my goal.
The bad news is that my mid-year forward dividend income number does not include that nasty Wells Fargo & Co. (WFC) dividend cut in mid-July.
Suffice it to say that given the dividend cut/suspension environment we are in this year, reaching this goal does not look good. In fact, at the start of 2020, I thought reaching $12,250 in annual forward dividend income would not be much trouble at all. However, even that number has come into question.
If you look at my projection at the beginning of the year, my biggest projected boost to my forward dividend income was going to come from dividend raises. So, with raises muted this year, and cuts/suspensions at the forefront, it’s no wonder I’m behind where I need to be in order to meet my goal.
PROJECTION –> FAIL… TOO MANY DIVIDEND CUTS/SUSPENSIONS AS OBSTACLES
3) Obtain $11,700 in actual dividend income
Here’s another goal impacted by my recent dividend cuts/suspensions.
I collected $10,049.68 in dividend income in 2019. At the beginning of 2020 I targeted a 15%-19% increase (with the lower end being most realistic) to put my projected dividend total in the $11,557.13 to $11,959.12 range.
At the halfway point of 2020, I’ve collected $5,761.68. As usual, this already includes 3 of the 4 2020 Pepsico (PEP) payouts due to their payment schedule.
If I add in my forward dividend income projections for the remaining 6 months of 2020, I calculate annual dividend income for 2020 to come in at $11.452.85. Unfortunately, this will be short of my goal as well.
I don’t expect the normal special dividend in December from Main Street Capital (MAIN) either, so this will make it harder to make up ground on the goal. Of course, ruling out any further dividend cuts/suspensions in the second half of 2020 would be foolish, so that will be working against me as well.
However, my projection also doesn’t include any new forward dividend income that will show up in dividend payments in the final 6 months of the year from reinvested dividends, dividend raises, or new capital investment. So, I will be getting some help… it just may not be enough.
PROJECTION –> I’M NOT CLOSING THE BOOK ON MEETING THIS GOAL, BUT IT’S LOOKING LIKE A REAL LONGSHOT
Bonus Goal #1 – Increase the weighting of Technology in my Portfolio
My goal is to get my Tech weighting to be within 5% of the Tech weighting of the S&P 500. As the year began, my Tech weighting was ~14% of my Portfolio, while it was ~23% of the S&P 500. That’s a decent 4% gap to make up, just to reach the outskirts of where I’d like to be.
In the first half of the year, I bought a good chunk of Broadcom (AVGO), and a bit of Microsoft (MSFT) as well. I’ve also been adding a stock that you wouldn’t associate with the Tech sector, but is classified that way, in Automatic Data Processing (ADP).
With this, you’d think I’d be making some headway on closing the gap, but strangely enough I’ve only made incremental improvement. While my Tech weighting has climbed to ~19.5% of my Portfolio, the Tech weighting of the S&P 500 has risen to ~27.5%. This still leaves me with at least another 3% to make up.
So, some progress here, but I’m still not in striking distance of my goal.
Bonus Goal #2 – Add a Utility stock to my Portfolio.
I haven’t done much to research any Utility candidates for my Portfolio. I’ve been hoping that NextEra Energy (NEE) would drop in price to around $200, so that I could initiate a position.
NEE did drop that far in the dark days of this past March, but I was purchasing other stocks at the time, and missed my chance. Now NEE has run up and away and $200 seems so far away.
If the first half has taught us anything… things can change in a hurry. So, I’ll keep watching NEE, hoping for another opportunity. Maybe I’ll scope out a few other Utilities while I wait.
Summary
It’s not looking too good for goal achievement at mid-year.
I think I’ll meet my investment goal, but my dividend goals have been squashed by the pandemic’s impact on a few of my Portfolio companies.
I’ve made small progress on one of my bonus goals (increasing Tech weighting in my Portfolio), while the bonus goal of adding a Utility to my Portfolio is a binary thing, and I haven’t found one to my liking yet.
I’ve got some time to see if I can adjust my course and reach my goals. However, for the two dividend goals, I just don’t see overcoming the dividend cut/suspension headwinds that will probably persist between now and the end of the year. If I’m lucky though, I’ll reach my investment goal and the two bonus goals.
Have your 2020 Portfolio goals encountered a few roadblocks this year? If so, which ones have made reaching your goals the most difficult? If not, what’s been the key to your success? I look forward to your comments.