Now that 2023 has come to an end, the time has come to review my 2023 Portfolio Goals. Hopefully, I achieved all of my goals. But if not, I’ll settle with achieving the majority of them.
In the past, I’ve been fairly successful with achieving the Portfolio goals I laid out for myself, however, I’ve yet to achieve every goal from a single year. Perhaps I’m challenging myself a little too much!
At the start of 2023, I set 6 Portfolio goals. These consisted of 3 primary goals and 3 bonus goals.
The primary goals included 1 investment goal and 2 dividend income goals. The bonus goals included 2 sector weighting goals and a goal to add a stock in the only sector missing from my Portfolio.
This past July I posted my Mid-Year Review of 2023 Portfolio Goals, and I wasn’t feeling overly optimistic. In fact, I projected that I’d only meet 2 of my 3 primary goals, and worse yet, fail to meet 2 of my 3 bonus goals, with the remaining bonus goal up in the air.
Still, with close to 6 months remaining in the year at that time, I had the power to alter my course and set myself up for better results than I projected. But did I? Let’s find out.
Review of 2023 Portfolio Goals
1) Invest at least $15,000 of new capital in the Portfolio
After 4 years of having a $10K investment goal, for 2023 I bumped up my investment objective to $15K. I was feeling confident apparently!
This is a net investment goal, so any Portfolio sales work against me if I don’t reinvest those sale proceeds.
By mid-year, I’d invested $7,623.13 of the $15K goal. So, I was basically on pace to reach my goal.
In the second half of the year I was able to do even better. I invested another $8,674.82, bringing my net investment to $16,297.95.
I crossed the $15K investment mark in early October, then slowed down from there, but still added over $1K more before year’s end.
As I mention each year, I have the most control of this goal compared to my others. Thus, if I was only going to achieve one goal all year, this is the one I’d expect achieve. I’m happy that I was able to deliver on this one.
During 2023, I executed a total of 37 transactions… far fewer than I’ve had in the past couple of years. This was comprised of 33 purchases and just 4 sales. The 4 sales were complete sales, too, in which I purged the stock from my Portfolio… no trims in 2023, just total elimination.
SUMMARY – GOAL MET!
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.). I’d need to add a single-year record of $2,284.91 in additional forward dividend income over the course of the year to reach my goal.
By mid-year, I’d tallied an increase of $1,002.16, which was only 43.86% of my goal. This was well off my pace, and left approximately $1,283 to go.
I was ahead of pace from only one source at the halfway point based on my estimates at the start of the year. That source was Reinvested Dividends. Dividend Raises and Investment of Capital were struggling to keep pace with my estimates and made it difficult for me to catch up in the 2nd half.
My Dividend Raises were hampered by the two V.F. Corp (VFC) dividend cuts during the year. Meanwhile, some of my Investment of Capital was used to recoup lost dividend income after purging some depressed holdings.
In the end, despite a late push, I fell short of my annual forward dividend income goal. I finished 2023 with a annual forward dividend income of $18,580.09, nearly $170 shy of my goal.
My average monthly forward dividend income finished the year at $1,548.34.
I ended up adding exactly $2,115 to my forward dividend income in 2023. That translated to a 12.85% YoY gain.
SUMMARY – GOAL MISSED!
3) Collect $17,100 in actual dividend income
I collected $15,208.55 in dividend income in 2022. At the beginning of 2023, I tried to justify a dividend income percentage increase range of 10%-12.9% for 2023, before settling at 12.5% for my goal. This would put my projected dividend total at roughly $17,100 by year’s end.
At the halfway point of 2023, I’d received $8,657.37. This was about 50.63% of my goal. So I was looking good here, especially since I’m normally at less than 50% by mid-year.
Thanks to some special dividends from Main Street Capital (MAIN) and Fastenal (FAST), and despite the second of the two VFC dividend cuts, I added $8,977.55 of dividend income in the 2nd half of the year.
Thus, by the end of 2023, my Portfolio generated $17,634.92 in dividend income. I easily surpassed my goal by 3.1%.
I added $2,426.37 to my actual dividend income in 2023. This had me soar well past my target, and was good enough for a 15.95% YoY gain.
SUMMARY – GOAL MET!
Bonus Goal #1 – Continue to increase the weighting of Technology in my Portfolio (reduce the weighting difference needed to get in my target range)
I generally try to keep my Portfolio’s sector weightings within +/- 3 percentage points of the S&P 500 sector weightings. 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%).
Over the course of 2023, I tried to help myself achieve the goal by adding to my existing Tech holdings. I increased my positions in Accenture (ACN), Skyworks Solutions (SWKS), Microsoft (MSFT) and Texas Instruments (TXN). However, none of my additions were significant in nature. I only invested a little less than $3K in total. That won’t move the needle much.
A more significant factor was that I’m underweight in the Tech sector and Tech soared in 2023. Thus, it probably stands to reason that I fell further behind in my weighting.
Unfortunately, I can’t directly tell though, as early in the year, a couple of my Tech stocks were reclassified into different sectors by the GICS. Automatic Data Processing (ADP) switched from the Tech sector to the Industrials sector, while Visa (V) switched from the Tech sector to the Financials sector. Needless to say, this put a big dent in my Tech weighting, especially since these are two of my larger Portfolio positions.
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% deficit.
When 2023 came to a close, my Portfolio’s Information Technology weighting was 17.24%, while the S&P 500 had a weighting of 28.85%… the delta was reduced just a bit compared to where I was at mid-year, falling to 11.61 percentage points, but this was still well above the difference I had to start the year. My Tech weighting difference got 4.37 percentage points worse in 2023… Ouch.
While the majority of this was out of my control, it still hurts to be so much farther off from where I wanted to be. Expect me to try and whittle down this weighting difference in 2024, and for this bonus goal to stick around for another year.
SUMMARY – GOAL MISSED!
Bonus Goal #2 – Continue to decrease the weighting of Industrials in my Portfolio (reduce the weighting difference needed to get in my target range)
I’ve been overweight in the Industrials sector for a long time. In this case, I’m trying to reduce my sector weighting as opposed to increasing it like I’m trying to do in Tech.
I started 2023 with my Industrials weighting 5.67 percentage points above that of the S&P 500 Industrials sector (14.32% vs. 8.65%).
What makes it difficult for me reduce this weighing difference is that I generally like my Industrials holdings and I’m not inclined to sell any of my positions. A trim isn’t out of question though if I feel that a holding is noticeably overvalued.
I did reduce by Industrials weighing difference early in 2023 when I purged 3M Co. (MMM) from my Portfolio. This was an easy sell given how MMM stock was performing and how their dividend growth was dwindling.
Unfortunately, my Industrials weighting later went up unexpectedly when ADP got reclassified from the Tech sector to the Industrials sector. This only added 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, my Industrials weighting difference had increased to 7.51 percentage points (16.00% vs. 8.49%). I was going in the wrong direction again.
During the 2nd half of 2023, I poured about $1K into bolstering my Cummins (CMI) position, too, and that didn’t help this goal either.
At the end of 2023, my Portfolio’s Industrials weighting was 16.74%, while the S&P 500 had a weighting of 8.81%. This made the weighting difference an even greater 7.93 percentage points, much greater than the 5.67 percentage difference I had to start the year.
SUMMARY – GOAL MISSED!
Bonus Goal #3 – Add a stock from the Energy sector to my Portfolio
I began 2023 with zero Energy stocks in my Portfolio and it had been more than 2 years since I owned one.
After a 2nd straight year of strong Energy returns in 2022, the sector weighting of Energy within the S&P 500 ballooned to 5.23%.
As a result of those gains, I was now outside of my target Energy sector weighting (which is +/-3 percentage points from the Energy sector weighting of the S&P 500). Adding a stock in that sector would not only provide my Portfolio with some representation from the Energy sector, but it would help reduce the weighting difference needed to get into my preferred range.
After an Energy stock I’d been watching for a while, Cactus Inc. (WHD), surged in price and out of my range, I wasn’t sure I’d find something to buy. However, at the beginning of this past October, I committed to establishing a position in Enbridge (ENB), as I looked for a high-yielding replacement for Walgreens Boots Alliance (WBA). ENB had been on a significant decline leading up to that time and it seemed like a good time to get in.
Three months later, I’m up on my ENB position and I’ve got my first Energy holding in years. Meanwhile, WHD has been dropping in price and I may get another crack at adding that Energy stock, too. A possible second holding in this sector… What’s going on?!
SUMMARY – GOAL MET!
Summary
My Portfolio had a good year in 2023. Value was up and dividends grew.
Yet, it was hit and miss with respect to achieving my Portfolio goals in 2023. It was a mixed bag with respect to both my primary goals and my bonus goals.
I met 2 of 3 of my primary goals, which was nice. I comfortably surpassed my new capital investment and dividend income goals, but fell shy of my forward dividend income goal.
As for my bonus goals, I only met 1 of the 3. I failed to increase the Information Technology sector weighting in my Portfolio, and failed to decrease the Industrials sector weighting. A couple of stock re-classifications early in the year worked against me. On a happier note, I was able to achieve my bonus goal of adding a stock from the Energy sector to my Portfolio. I said hello to Canadian stock Enbridge (ENB).
Achieving a clean sweep of my Portfolio goals in 2023 proved more challenging than I expected. I struggled to even split the difference between success and failure. Still, achieving 3 of 6 Portfolio goals is a decent result. I’ll aspire to have a better performance next year.
My 2024 goals should be posted in the coming week, so keep your eyes open for that.
Did you set portfolio goals for 2023. How did you fare? Better than me, I hope. I look forward to your comments.