Since we’ve officially kicked off the second half of 2022, it’s time to review my 2022 Portfolio Goals.

How am I doing with regard to progress towards those goals?  Is everything looking good?  Or do Portfolio adjustments need to be made now to keep me on course?

For 2022, I set 5 Portfolio goals.  This was comprised of 3 primary goals and 2 bonus goals.

The primary goals included 1 investment goal and 2 dividend income goals (ones I consistently set).  Meanwhile, the bonus goals included 2 sector weighting goals.

I’ll briefly review the goals below, but check out my 2022 Portfolio Goals post from this past January for even more details.

And now… the Mid-Year Review of my 2022 Portfolio Goals.

 

Revisiting my Portfolio Goals for 2022

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

I’ve had this same goal every year since 2019.  I’ve achieved it every year since then, too.  Will I do it again?

Well, I would think so, since it’s the goal I have the most control over.  I targeted $6K ($500/mo.) to $12K ($1K/mo.), but settled on $10K for the year.

Note that this $10K is net capital investment into my Portfolio.  Any Portfolio sales negatively affect my investment total if they are not plowed back into the Portfolio.

In the first half of 2022, I’ve made a total of 25 transactions.  For comparison, this is a bit less than what I had in 2021.

The trades were comprised of 20 purchases and 5 sales.  My sales in 2022 have been reduced 50% relative to the first half in 2021.  Don’t want to sell too much while the stock market is down, right?

Anyway, for the first half of 2022 I made a net capital investment of $6,564.29.  This is about two-thirds of my goal at the halfway point… looking good.

Of the remaining ~$3.5K I’ll need to invest, I’ve got roughly $2K of it already ready, with the other $1.5K available by the end of Q3.

So, the cash will be ready.  I’ll just need to invest it.

PROJECTION –> SUCCESS

 

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.)

To reach my goal I’ll need to add $1,938.30 in additional forward dividend income over the course of the year.

At the halfway point, I’ve managed to add $1,042.52 to my annual forward dividend income, or roughly 53.8% of my goal.  That leaves approximately $896 to go.

Of the $1,938.30 I needed at the onset, I was anticipating about $356 to come from reinvested dividends, $1,141 from dividend raises, and $300 from new capital investment and strategic stock swaps.

The extra $141 was slated to come from:

• 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.

So far, additional forward dividend income has come from these sources:

• Reinvested Dividends – $228.29
• Dividend Raises – $652.80
• New Capital Investment/Stock Swaps – $161.43

Just like last year, I’m ahead of pace in each category at the halfway point.

I’m very happy with the performance from Reinvested Dividends.  The total from this source has been boosted thanks to the lower stock prices in 2022 resulting in buying more shares with the reinvestment.

I’ve also been happy to see Dividend Raises coming in solidly.  I would say the percentage boost I’m seeing in 2022 is not as good as that from 2021, but it’s still good.

Where I’m perhaps a bit disappointed in is my New Capital Investment/Stock Swaps.  I should have posted a better number considering I’ve invested almost two-thirds of my projected new capital for the year.  Also, I’ve purged/trimmed a few higher-yielding holdings (for various reasons) and replaced them with lower-yielding stocks.  In order to recoup the lost dividend income from this, I’ve had to add some of my new capital to the sale proceeds when buying the lower-yielding stocks.  This money is effectively invested at 0% yield.

Still, overall I’m in a good position to reach my goals, especially if I remain diligent.

PROJECTION –> SUCCESS

 

3) Obtain $15,100 in actual dividend income

I collected $13,466.05 in dividend income in 2021.  At the beginning of 2022 I targeted a ~12.13% increase for 2022, with a stretch goal of a 13% increase.  This would put my projected dividend total at $15,100 by year’s end, or $15,217 if I overachieved.

Note – on a monthly basis, I target 15% YoY increases in dividend income, but with my Portfolio continuing to grow in size, that 15% number is a bit too aggressive for annual growth.

At the halfway point of 2022, I’ve received $7,474.39.  As usual, this already includes three of the four Pepsico (PEP) dividends for 2022, but only one of four from Nike (NKE), due to their payment schedules.

If I add in my currently projected forward dividend income of $7,561.37 for the remaining 6 months of 2022, I expect my annual dividend income for 2022 to come in at no less than $15,035.76.  While this would put me a little shy of my goal, it doesn’t yet account for the boost I will get from reinvested dividends, dividend raises, or new capital investment in the final 6 months.  Thus, I’m in a good position to meet this goal.  My stretch goal may be out of the question though.  We’ll see where I end up.

PROJECTION –> SUCCESS, BUT NOT AS CONFIDENT WITH THIS ONE

 

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)

Within my Portfolio, I generally try to keep my sector weightings within +/- 3 percentage points of the corresponding S&P 500 sector weighting.

However, I continue to have a pair of Portfolio sectors that are noticeably underweight their S&P 500 counterparts – one of them being Information Technology.

I started 2022 with my Information Technology weighting 8.45% below that of the S&P 500 Tech sector (20.72% vs. 29.17%).  Thus, the delta to get into target range is 8.45% – 3% = 5.45%.

The challenge is make up half the difference that it would take to bring me into target range (half the difference is 5.45% / 2 = 2.72%).  Adding the 2.72% to my 3% outer range would be 5.72%.  So, to succeed, I need to get my weighting difference in the Tech sector to be no more than 5.72% below that of the S&P 500 Tech weighting by the end of 2022.

At the midway point of 2022, my Information Technology trailing percentage was 18.88% and the S&P 500 Tech weighting was 26.62% … so, a difference of 7.74 percentage points.  Unfortunately, this is less than one third of the amount I need to make up at the halfway point of the year.

The ground I did make up was partly due to a purchase of Skyworks Solutions (SWKS) early in February, and some shares of Visa (V) that I added in May.  However, I’m going to need to put more into Tech in the second half of 2022 if I plan to put a dent in that difference I still have.

There’s certainly hope that I can still achieve this bonus goal, but by not being halfway to my goal at midyear, I’ve made it difficult on myself.  I’m going to need to put my new investment capital in Tech, or trim an overweight Portfolio sector and reallocate the proceeds to Tech.

PROJECTION –> UNDETERMINED, BUT LEANING TOWARDS FAILURE

 

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)

Keeping my Industrials weighting within +/- 3 percentage points of the S&P 500 Industrials is the goal.  I’ve been overweight in this sector for quite a long time.  However, just like it was with Bonus Goal #1, I’m not trying to make up all the difference this year, just half of it.

I started 2022 with my Industrials weighting 5.95% above that of the S&P500 Industrials sector (13.72% vs. 7.77%).  Thus, the delta to get into target range is 5.95% – 3% = 2.95%.

Once again, the challenge is to make up half the difference that it would take to bring me into target range (half the difference is 2.95% / 2 = 1.47%).  Adding the 1.47% to my 3% outer range would be 4.47%.  So, to achieve the goal, I need to get my weighting difference in the Industrials sector to be no more than 4.47% above that of the S&P 500 Industrials weighting by the end of 2022.

At the midway point of 2022, that percentage difference has increased slightly to 6.22% (14.01% vs. 7.79%).  While the percentages haven’t changed much over the first half of the year, I’m going in the wrong direction.  Now there’s even more work to do!

While my trim of 3M Co. (MMM) in April helped move me towards my goal, my subsequent purchase of Cummins (CMI) all but negated the positive impact.

3M remains on my chopping block due to disappointing price performance and sub-1% dividend growth in recent years.  If I eliminated this position and invested in a different sector (put it in Tech!) then I’d be well on my way to bringing my Industrials into my target range.  Unfortunately, I don’t feel like selling the position at a depressed price.

PROJECTION –> UNDETERMINED, BUT LEANING TOWARDS FAILURE UNLESS I FIND AN INDUSTRIALS HOLDING TO TRIM/PURGE.

 

Summary

I established 5 goals at the beginning of the 2022.  They consisted of 3 primary goals (1 investment goal and 2 dividend income goals) and 2 bonus goals (2 sector weighting goals).

Achieving my primary goals appears to be in good shape, but achieving the bonus goals is looking questionable.

If I just keep doing what I’m doing, the primary goals should be achieved.  However, I’ll need to take thoughtful steps to bring my most underweight (Tech) and most overweight (Industrials) sectors into my target weighting ranges.

Six months is plenty of time to address my sector weightings, but will I find favorable prices/times in which to make the necessary moves?

 

Where do you stand with regard to your 2022 portfolio goals?  Are you taking active strides to achieve your goals, or do you just act normally and see where things land?  I look forward to your Comments.