After some great success in achieving my Portfolio goals in 2021, I’m back for another installment for 2022.

I’ve yet to achieve all my goals in any single year, so I’ve got something to aspire to in 2022.  Here’s a short recap of my past performance…

• 2018 – achieved 2 of 3 goals
• 2019 – achieved 2 of 3 goals
• 2020 – achieved 1 of 3 primary goals, and 1 of 2 bonus goals
• 2021 – achieved 3 of 3 primary goals, and 2 of 3 bonus goals

I was quite close to perfection last year.  I anticipate this year to be more difficult, as I can’t expect such a favorable market backdrop as we had in 2021.

For 2022, I’m keeping my 3 primary goals once again.  I view these as the most important goals to achieve.  These primary goals are based on new capital investment, annual forward dividend income, and actual dividend income.

I’ll also toss in some bonus goals as I’ve done in each of the past couple of years.  These bonus goals have tended to center around impacting my sector weightings in an effort to reach the target weightings I desire.

Let’s kick off the new year with a new set of Portfolio goals…

 

Portfolio Goals for 2022

1) Invest at least $10,000 of new capital in the Portfolio

I’ve had this identical goal for 3 years running now.  Currently, investing $6K ($500/mo.) to $12K (1,000/mo.) is what I can expect to contribute.

Investing $6K shouldn’t be a problem, while investing $12K is a bit of a stretch.  Thus, $10K is a good compromise.  I usually reach December before I accomplish this goal, so it’s not a given.

Just a reminder that this is ‘new’ capital invested into my Portfolio.  I’ll probably be reinvesting over $15K in dividends during the year, too.  However, the reinvested dividends are already part of the Portfolio, as opposed to new money being added to the Portfolio.

While most of my additional forward dividend income in any year is the result of dividend raises, the 2nd biggest contributor is from investment of new capital.  Thus, I want to continue these investments (especially while I continue to work) in order to keep my Portfolio growing as much as possible.

 

2) Reach $16,200 in annual forward dividend income

I began 2022 with annual forward dividend income of $14,261.70 (or ~$1,188.48/mo.).  This was the result of adding over $2,225 during 2021… the most I’ve added in a single year and the only time I’ve crossed the $2K threshold.

I’m not sure I can count on another banner year when it comes to additional forward dividend income.  2020 was abnormally low, while 2021 was abnormally high.

In order to reach my goal of $16,200 in annual forward dividend income by the end of 2022, I’ll have to post better results than I’ve averaged over the past few years.  However, I won’t have to add a record amount, such as I did in 2021.

I’ll need to add $1,938.30 in additional forward dividend income over the course of the year.  Should I reach my goal, I’ll be averaging $1,350/mo. by year’s end.  I’d like that!

Here’s my outline for adding the needed $1,938.30 to reach my goal:

• Reinvest the $14,261.70 in annual forward dividend income that I’m starting the year with at an average 2.50% (i.e. ~$356 in additional forward dividend income due to dividend reinvestment)
• Realize a weighted average 8% dividend raise across the current Portfolio holdings (i.e. ~$1,141 in additional forward dividend income due to dividend raises)
• Invest the $10K mentioned above at a target yield of ~3.00% (i.e. ~$300 in additional forward dividend income due to new capital investment).  This 3% yield is higher than my year-end Portfolio average of 2.23%, but I believe I can achieve higher yields with my new capital investments in 2022.

In total, that’s ~$1,797 in additional forward dividend income that I’m planning on.  This still leaves me over $141 short of my $1,938.30 target.

Of course, there are ways I can find the final $141 in additional forward dividend income needed to obtain my $16,200 goal:

• Invest more than $10K in new capital
• Invest the new capital and/or the reinvested dividends at a higher yield than I projected (3% for new capital investment, and 2.5% for reinvested dividends)
• Get a larger weighted average dividend raise than the projected 8%.
• Make some strategic stock swaps, trading one or more lower-yielding investments for higher-yielding ones.  I was successful in doing this in 2021.

Since most of my additional forward dividend income is due to dividend raises, reaching my 8% weighted average dividend raise target becomes the most important factor when it comes to achieving this goal.  Of course, I’ll need to avoid dividend cuts and suspensions in 2022, as well, as I haven’t factored in any such events.

 

3) Obtain $15,100 in actual dividend income

Things went really well in 2021 in regard to actual dividend income.  I finished the year at $13,466.05 (for an average of $1,122.17/mo.).

My final total was helped by a huge special dividend from T. Rowe Price Group (TROW) in July, which added $355.31.  Without that I would have fallen short of my goal.  Perhaps last year’s goal was a bit too aggressive?

I’ve been pretty consistent in having my actual dividend income rise by at least $1,500 over in each of the previous 5 years.  Thus, I see that as my low bar.  On the high end, I don’t foresee myself exceeding $1,700 (which would be one of my better efforts).  So, I’m going to split the difference and target adding around $1,600 in dividend income in 2022.  I’ll then add some to round out my goal amount, which becomes $15,100 (an average of $1,258.33/mo.).

Should I reach this goal, it will translate into a Year-over-Year (YoY) percentage increase in dividend income of ~12.1%.  This is still well into double-digit growth territory, and a good chunk ahead of the 10% growth number I want to meet at a minimum.

As a stretch goal, I might shoot for 13% growth in actual dividend income.  This would put me at ~$15,217 by the end of 2022.

 

Bonus Goal #1 – Increase the weighting of Technology in my Portfolio (make up half of the weighting difference needed to get in my target range)

This was the one 2021 goal that I didn’t accomplish.  So, I’m giving myself another chance to succeed at it in 2022.

I generally try to keep my Portfolio’s sector weightings within +/- 3 percentage points of the S&P 500 sector weightings.  I started 2022 with my Information Technology weighting 8.45% below that of the S&P 500 Tech sector (20.72% vs. 29.17%).  I don’t think I can make up more than the 5.45% delta (8.45% – 3%) I’d need to get me within the weighting range I have.  So, rather than say I’m going to get within range, I’ll shoot for making up half the difference.  This means that I desire to get my weighting difference in the Tech sector to be no more than -5.72% by the end of 2022.  This is going to be a big challenge.

Tech does seems to be correcting as we begin 2022.  Thus, there may be more favorable prices within the sector this year.  If the prices can come down further, I should be able to invest some of my new capital into the sector and help reduce the weighting delta.  If I can get my Portfolio’s Tech holdings to perform well in 2022 (better than the S&P 500 Tech sector as a whole), that would help as well.

At this time, based on current prices, I could see adding to Skyworks Solutions (SWKS) and perhaps Visa (V).  Ideally, I’d like to invest more into Microsoft (MSFT) and Amdocs Ltd. (DOX) since these are currently some of my smaller Tech holdings.  However, I’d want the prices for MSFT and DOX to retreat some before investing.

 

Bonus Goal #2 – Decrease the weighting of Industrials in my Portfolio (make up half of the weighting difference needed to get in my target range)

While I made progress in decreasing the weighting of Industrials within my Portfolio in 2021, there’s more work to do to get within my target range.

2022 began with my Industrials weighting 5.95% above that of the S&P500 Industrials sector (13.72% vs. 7.77%).  I don’t see myself slashing my Industrials holdings enough to get within my +/-3 percentage point range.  However, I’d like to continue moving in that direction.  So, I’ll target making up half the weighting difference again.  This means my target will be to get my weighting difference in the Industrials sector to be no more than +4.47%.

Looking at my current Industrial holdings, 3M Co. (MMM) is my least favorite.  Dividend growth for MMM has been anemic the past two years, and price performance has been flat. I could be motivated to start selling some MMM if another weak dividend raise arrives in early February.

 

Summary

This is not much of a change from last year’s goals.  I’m sticking with 3 primary goals this year, but reducing my number of bonus goals from 3 to 2.

Once again, my primary goals are comprised of 1 investment goal and 2 dividend income goals.

Meanwhile, for the bonus goals, I’ve maintained my 2 sector weighting goals.  These are… increase my Tech weighting and decrease my Industrials weighting.  In each case I target halving the outstanding weighting difference in order to get within my desired weighting range.

Achieving all these goals looks difficult, but I’m giving it a go.  Should I succeed, it will be the first time I’ve accomplished all of my annual Portfolio goals.

I’ll do a mid-year check on my progress in July.  See you then!

 

How do you feel about reaching any/all of your 2022 portfolio goals?  Can you get it done?  I look forward your Comments!