With half of 2023 already in the rear-view mirror, it’s time to review my 2023 Portfolio Goals and see where I stand.

Am I making progress on achieving my Portfolio goals?  Do I just need to stay the course, or do I need to course correct?  Let’s find out.

For 2023, I set 6 Portfolio goals.  This was comprised of 3 primary goals and 3 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 and 1 sector participation goal.

I’ll briefly review the goals below, but check out my 2023 Portfolio Goals post from this past January for even more details.

Let’s start this Mid-Year Review of my 2023 Portfolio Goals…

 

Revisiting my Portfolio Goals for 2023

1) Invest at least $15,000 of new capital into the Portfolio

After 4 years with a $10K goal for new capital investment, I increased this to $15K in 2023.  This is an average of $1,250/mo.

Note that this $15K 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 2023, I’ve made a total of 16 transactions.  For comparison, I made 25 in the first half of 2022.

The trades were comprised of 15 purchases and 1 sale.  Such a low number of sales is noticeably lower than in past years.

For the first half of 2023 I made a net capital investment of $7,623.13.  This is just over the halfway point.  Thus, I’m right on track to meet my goal.

Of the remaining ~$7.4K I’ll need to invest, I’ve got nearly $5.9K of it already.  I’ll have the remaining $1.5K available by the end of Q3.

So, with no real concerns about where the cash will come from, I can focus on the investment part.  Here’s hoping I find some worthy investment prospects.

PROJECTION –> SUCCESS

 

2) Reach $18,750 in annual forward dividend income

I began 2023 with annual forward dividend income of $16,465.09 (or ~$1,372.09/mo.)

To reach my goal I’d need to add $2,284.91 in additional forward dividend income over the course of the year.

At the halfway point, I’ve managed to add $1,001.50 to my annual forward dividend income, which is only 43.8% of my goal.  That leaves approximately $1,283 to go.  This outstanding amount is going to make reaching my goal more difficult than I anticipated.

Of the $2,284.91 I needed at the onset, I was anticipating about $453 to come from reinvested dividends, $1,217 from dividend raises, and $450 from new capital investment and strategic stock swaps.

The extra $165 on top of that was slated to come from:

• Invest more than $15K 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 2.75% 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 in 2023, additional forward dividend income has come from these sources:

• Reinvested Dividends – $288.41
• Dividend Raises – $507.34
• New Capital Investment/Stock Swaps – $205.75

While I’m ahead of pace with respect to Reinvested Dividends, I’m well behind pace on Dividend Raises, and a little off pace for New Capital Investment/Stock Swaps.

Reinvested Dividends outperformed in the first half thanks to stock prices retreating.  The lower stock prices in 2023 resulted in buying more shares with the reinvestment.

On the other hand, Dividend Raises have been most disappointing.  Not only have dividend hike percentages been lower in 2023 relative to past years, but I also suffered through a dividend cut that put a crimp in the additional forward dividend income I get from Dividend Raises.  The dividend cut came courtesy of V.F. Corp (VFC), which sliced their dividend by more than 41% in February.  This reduced my additional forward dividend income by more than $87.  If VFC had frozen their dividend instead of cutting I’d still be a bit off pace, but in much better shape.  However, first half dividend raise results were carried by a monster 50% hike from Nexstar Media Group (NXST).  Without this hefty raise from one of my more significant dividend payers, my numbers would look noticeably worse.

As for New Capital Investment/Stock Swaps, the fact that I’ve invested a bit over half of my projected capital, but saw only 80% or so of the expected additional forward dividend income from that suggests that I’m investing my capital with a yield below my projected 3% mark, and that I didn’t efficiently replace the income I lost from my lone stock sale, 3M Co. (MMM).

When the contributor I count on the most for additional forward dividend income each year (Dividend Raises) is failing to meet expectation at the mid way point, it makes for a serious uphill climb in the 2nd half.  Thus, I’m doubtful I can reach my annual forward dividend income goal.

PROJECTION –> FAILURE

 

3) Collect $17,100 in actual dividend income

I collected $15,208.55 in dividend income in 2022.  For 2023, I targeted an income gain minimum of $1,521 (10% YoY increase) and a maximum of $1,962 (12.9% YoY increase).

Given that my YoY increase percentage will probably come down in 2023, I thought a 12.5% YoY gain target was appropriate.  This translated into an increase of $1,901.07 and would have me finish at $17,109.62 for 2023.  I rounded down just a bit and set my goal at $17,100 for my actual dividend income goal (an average of exactly $1,425/mo. by year’s end).

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 2023, I’ve received $8,657.37 in dividend income.  As usual, my first half total already includes three of the four Pepsico (PEP) dividends for 2023, but only one of four from Nike (NKE), due to their unique payment schedules.  A pair of supplemental dividends from Main Street Capital (MAIN) boosted my first half total.

If I add in my currently projected forward dividend income of $8,622.52 for the remaining 6 months of 2023, I expect my annual dividend income for 2023 to come in at no less than $17,279.89.  This would put me past my dividend income goal with good margin.  It also 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 don’t see why I won’t reach my goal.

PROJECTION –> SUCCESS

 

Bonus Goal #1 – Continue to increase the weighting of Technology in my Portfolio (reduce 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 2023 with my Information Technology weighting 7.24 percentage points below that of the S&P 500 Tech sector (18.50% vs. 25.74%).  Thus, the minimum change to get into target range was 7.24% – 3% = 4.24%.

I did make a pair of Tech sector additions in Accenture (ACN) and Skyworks Solutions (SWKS) during the first half of 2023, but they were apparently too small to have a meaningful impact.

More significantly, in the first half of 2023 two of my Portfolio stocks got removed from the Information Technology sector.  Those stocks were Visa (V) and Automatic Data Processing (ADP).

Thus, the Information Technology weighting of my Portfolio decreased a fair amount, since V and ADP are two of my larger holdings.  Sadly, this noticeably increased the weighting difference I was looking to reduce via my goal.

At the midway point of 2023, after accounting for the sector change of V and ADP, my Information Technology sector weighting was 16.04%, while the weighting of that sector in the S&P 500 was 28.27%.  The weighting difference ballooned to 12.23%, requiring a delta of 12.23% – 4.24% = 7.99% just to reduce the weighting difference I had in my Tech sector to start the year.

Obviously, this goal is now looking like a real longshot… even if I loaded up on all Tech with my second half new capital investments.

PROJECTION –> FAILURE

 

Bonus Goal #2 – Continue to decrease the weighting of Industrials in my Portfolio (reduce 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 just trying reduce the weighting difference I have by the end of the year… to any degree.

I started 2023 with my Industrials weighting 5.67 percentage points above that of the S&P500 Industrials sector (14.32% vs. 8.65%).  Thus, the minimum change to get into target range was 5.67% – 3% = 2.67%.

When I closed out my MMM position in mid February, I made a lot of progress, as my Industrials weighting declined a good amount.

Unfortunately, my Industrials weighting later went up unexpectedly due to one of those two stocks I mentioned earlier getting reclassified out of the Tech sector.  ADP went from Tech to Industrials, adding to my already overweight Industrials position.  In addition, I made a small add to my ADP position during the first half of 2023, further hindering any progress.

At the midway point of 2023, that percentage difference increased to 7.51% (16.00% vs. 8.49%).  Needless to say, this is going in the wrong direction again.

Given that I like my existing Industrials positions, I suspect I won’t be eliminating any of them in the second half of the year, making it difficult to reach my goal.

PROJECTION –> FAILURE

 

Bonus Goal #3 – Add a stock from the Energy sector to my Portfolio

I’ve had a hard time finding a stock I want to buy in the Energy sector.  Typically, the stocks have high yields, but dividend growth is lacking.

Anyway, I was all lined up to add an Energy stock to my Portfolio at the end of May.  I’d been watching Cactus Inc. (WHD) for a couple of weeks and planned to initiate my position at $31.

At the time the stock looked undervalued, and while the yield was only around 1.4%, the near-term earnings growth looked good (percentages in the teens), as did recent dividend increases.  Also, the stock is a mid-cap stock, which would have been good to add to my Portfolio for a little diversification on the capitalization front.

Sadly, the stock got below $31.50, but never reached $31.  It then promptly reversed course and just a month and a half later now trades near $46.  Another missed opportunity.  I guess I’ll wait to see if the price of WHD retreats, otherwise I’ll have to keep looking around the sector.

While I wasn’t able to attain this bonus goal in the first half of the year, I’ve got another 6 months to get the job done.  We’ll see what transpires.

PROJECTION –> TO BE DETERMINED

 

Summary

I set 6 Portfolio goals at the start of 2023.  They consisted of 3 primary goals (1 investment goal and 2 dividend income goals) and 3 bonus goals (2 sector weighting goals and 1 sector participation goal).

At the midway point of the year, achieving 2 of my 3 primary goals looks promising.  I’m confident I’ll reach my investment goal and my actual dividend income goal.  The annual forward dividend income goal, however, is in serious doubt.  Lackluster dividend raises in the first half of the year, coupled with the one dividend cut I had from VFC, are the primary culprits.

As for the bonus goals, those look to be in worse shape.  The two sector weighting goals were hurt by the sector reclassification of a pair of Portfolio stocks: V & ADP.  I don’t believe I can work any magic in the second half of 2023 to achieve these goals.  However, any progress I can make toward getting close will be welcomed.

As for the sector participation goal, I still don’t have an Energy stock in my Portfolio.  I felt like achieving this goal was going to be a done deal, but the stock I was eyeballing to capture goal success got out of reach after its swift price turnaround.  The search will continue.

Frankly, given my normal behavior with regard to operating my Portfolio, I don’t think I’ll be able to turn any of my projected goal failures into goal successes by year’s end.  I wouldn’t be surprised to find out at the start of next year that I achieved 2 of the 3 primary goals and that 2 of the 3 bonus goals were not achieved.  Perhaps the only goal up in the air is my bonus goal related to adding an Energy stock to my Portfolio.

I’ll check back in 6 months from now to see how I finished up.

 

Did you set any portfolio goals for 2023?  How are things looking when it comes to possible goal achievement for you?  I look forward to your Comments.