I’m back to share my Portfolio goals for yet another year! For the most part, I’ve been successful in achieving the majority of my goals each year, and I hope that continues.
Unfortunately, last year was a mixed bag of achievement. See the following post for the details… Review of 2023 Portfolio Goals.
In summary, I achieved 2 of my 3 primary goals, but only 1 of my 3 bonus goals. It was 3 for 6 overall regarding goal success… there’s room for improvement, no doubt.
Having complete goal success in any given year is something that has avoided me thus far. Perhaps 2024 will be my year!
If nothing else, setting my Portfolio goals will keep me focused on the dividend-related tasks in front of me this year.
For 2024, I’m sticking with my 3 primary goals – no changes here other than the amounts. These will be the most important goals to achieve. These primary goals are based on new capital investment, annual forward dividend income, and actual dividend income.
Once again, I’ll also set some bonus goals. My first two bonus goals are identical to the first two bonus goals from last year. I’m keeping them around since the GICS sector re-classification that took place in 2023 for a couple of stocks in my Portfolio altered my chances at success. Hopefully, no such events will impact me this year, and I can easily assess my progress, or lack thereof. These two bonus goals aim to bring a couple of my Portfolio sector weightings into a desired target range.
My third bonus goal will be a new one. It will involve making sure I have fewer stocks in my Portfolio that fail to have a 0.5% value weighting within my Portfolio.
Let’s check out my Portfolio goals for 2024…
Portfolio Goals for 2024
1) Invest at least $10,000 of new capital in the Portfolio
$10K of investment has been my typical goal in the past. Last year though, after 4 years with a $10K goal, I bumped up my target to $15K. I was successful in reaching that elevated goal, too.
However, that $15K level is probably going to be too lofty this year. So, in 2024 I’m bringing this goal back to $10K again.
In 2024, I’ll be busy trying to stockpile some cash in my dash to retirement. Extra cash will be needed to help ride through any ‘sequence of returns’ risk I might encounter in the early years of retirement.
Sadly, that means my investment goal will have to suffer a bit. I believe I’d be confident with an $8K investment level, and that $9K might be a bit of a stretch. $10K will be a challenge, but that’s what I’m going with.
Note that this is ‘new’ capital invested into my Portfolio. I’ll probably be reinvesting around $19K 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.
Also note that this is a ‘net’ capital investment, so that money that comes out of my Portfolio (such as sales from my Portfolio or dividends that are not reinvested) subtract from the new capital investment amount.
2) Reach $21,000 in annual forward dividend income
I began 2024 with annual forward dividend income of $18,578.06 (or ~$1,548.17/mo.). This was the result of adding over $2,115 of additional forward dividend income during 2023… That’s 3 consecutive years of ~$2.2K being added.
In order to reach my goal of $21,000 in annual forward dividend income by the end of 2024, I’ll have to add a record amount of $2,250 of forward dividend income this year. This amount is slightly higher than the record $2,224.04 I posted in 2021.
Should I reach my goal, I’ll be averaging $1,750/mo. at the end of 2024… that sounds glorious.
Here’s my outline for adding the needed $2,250 to reach my annual forward dividend income goal:
- Reinvest nearly all the $18,578.06 in annual forward dividend income that I’m starting the year with at an average 2.70% (i.e. ~$500 in additional forward dividend income due to dividend reinvestment)
- Realize a weighted average 7% dividend raise across the current Portfolio holdings (i.e. ~$1,300 in additional forward dividend income due to dividend raises). Note – I lowered this from my usual 8% dividend raise weighted average.
- Invest the $10K of new capital 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 2.73%, but I believe I can achieve higher yields with my new capital investments in 2024.
In total, that’s ~$2,100 in additional forward dividend income that I’m planning on. This still leaves me about $150 short of my $2,250 target.
Of course, there are ways I can find the final $150 in additional forward dividend income needed to obtain my $21,000 goal, including:
- Invest more than $10K in new capital
- Invest the new capital and/or the reinvested dividends at a higher yield than I projected (3.0% for new capital investment, and 2.7% for reinvested dividends)
- Get a larger weighted average dividend raise than the projected 7%.
- Make some strategic stock swaps, trading one or more lower-yielding investments for higher-yielding ones. Unfortunately, I did the opposite of this in 2023, as I replaced several under-performing high-yield stocks in my Portfolio with lower-yielding, safer dividend stocks.
Of course, I’ll need to avoid dividend cuts and suspensions in 2024 as well. Last year the two V.F. Corp (VFC) dividend cuts were definitely an obstacle to my goal success.
3) Collect $19,750 in actual dividend income
My actual dividend income rose quite nicely in 2023, ending the year at $17,634.92 (for an average of $1,469.58/mo.). I added $2,426.37 in actual dividend income compared to the prior year, with the YoY growth being 15.95%. This percentage was well past the top end of my expected 10%-12.9% range, and was the first time I added more than $2K since 2016 (which was a year driven by heavy investment).
Since last year was such an outlier relative to progress in previous years, I’m hesitant to believe I can duplicate the effort.
So, if I’m going to bound the increase in my actual dividend income for 2024, it would be a minimum of $1,763 (10% YoY increase) and a maximum of $2,116 (12% YoY increase). This would put my actual dividend income for 2024 at $19,398 for 10% YoY growth, and $19,751 for 12% YoY growth. I’m going to go for the top end of the range, rounding down $1 to get $19,750.
Ideally, I’d like to reach $20K in actual dividend income for 2024 (just $250 more) since it seems I’ll be so close. So, I’ll set that as a stretch goal. I hope I make it!
If I reach the $19,750 threshold, I’ll be pulling in an average of $1,645.83/mo.
Bonus Goal #1 – Continue to increase the weighting of Technology in my Portfolio (reduce the weighting difference needed to get in my target range)
This goal is the same as last year. I kept it since that GICS re-classification last year forced a couple of my Portfolio stocks from the Tech sector to other sectors, changing my goal from a possibility to a longshot. So, I’m giving myself another go at it this year.
At the start of 2024, my Information Technology sector weighting was underweight that of the S&P 500 by 11.61 percentage points (17.24% vs. 28.85%). My Tech sector weighting would have to increase by 8.61 percentage points just to reach the outside of my +/-3 percentage points target range. Luckily, this goal doesn’t require getting into range, only to make progress towards getting into range. Any reduction in that 11.61 percentage point weighting difference will do.
I could make progress towards this goal by:
- putting my new capital investment into Tech sector holdings
- having my existing Tech sector holdings outperform the S&P 500 Tech sector during the year
- selling a stock in one of my overweight sectors and re-deploying the proceeds into a Tech sector holding
Bonus Goal #2 – Continue to decrease the weighting of Industrials in my Portfolio (reduce the weighting difference needed to get in my target range)
Here’s another goal that stayed the same. This goal was also a victim of that GICS re-classification from last year. Thus, this is a second chance to meet the goal… hopefully with no interference this time.
2024 began with my Industrials sector weighting being overweight by 7.93 percentage points compared to the S&P 500. I would need to decrease my Industrials sector weighting by 4.93 percentage points in order to reach the outside of my +/-3 percentage points target range. Just as in Bonus Goal #1, I don’t need to get into target range, only to make progress towards getting in range. Success will be any reduction in the 7.93 percentage point weighing difference.
I could make progress towards this goal by:
- avoid putting any of my new capital investment into Industrials sector holdings
- having my existing Industrials sector holdings underperform the S&P 500 Tech sector during the year (why would I want that!)
- selling a stock in my Industrials sector and re-deploying the proceeds in any of the other 10 sectors (seems like the most logical choice)
Bonus Goal #3 – Cut in half (at least) the number of stocks that don’t have a 0.5% value weighting within my Portfolio
I’ve mentioned before that I’d like each of my holdings to have at least a 1% weighting of value in my Portfolio. At the start of 2024, there were 24 stocks that didn’t meet that criteria (out of 59 stocks).
It would be a tall task to get each of those to have a weighting north of 1% in 2024. So, I thought I’d try to tackle the handful of stocks that fail to even meet a 0.5% value weighting. There were only 6 stocks that small to begin the year.
This could be addressed by investing enough new capital into these 6 holdings to get them over the 0.5% weighting threshold, using any sale proceeds I might have to buy more shares in these positions, by eliminating the stock from my Portfolio altogether, or just having the individual stock outperform the rest of my Portfolio.
Regardless of how it gets done, I hope to have 3 or less stocks with such a small Portfolio weighting by the end of 2024. I doubt I’ll address all 6 of these stocks, but who knows how things will shake out.
Here are those 6 small holdings that failed to hold at least a 0.5% value weighting in my Portfolio at the start of 2024:
- VICI Properties (VICI) – 0.499% (almost there!)
- UGI Corp (UGI) – 0.498% (close too!)
- McCormick & Co. (MKC) – 0.420%
- NNN REIT (NNN) – 0.405%
- Walt Disney Co. (DIS) – 0.399%
- Whirlpool (WHR) – 0.283%
Summary
My goals should look very similar to what I had last year. For the most part, just some of the target numbers changed! I still have 3 primary goals, and 3 bonus goals.
My primary goals still consist of the 1 investment goal and the 2 dividend income goals.
The bonus goals are still comprised of the same 2 sector weighting goals I had last year (do over!), but I did add a bonus goal I haven’t had before. The new bonus goal has me address some of my smallest holdings… making them a more significant part of my Portfolio, or purging them from the Portfolio.
Maybe 2024 will be the year I achieve all of my goals. History says that won’t be the case. Let’s see how it plays out!
I’ll be checking on my goal progress in July, as part of my mid-year review. See you then!
Do you have any 2024 portfolio goals? What’s the #1 thing you hope to accomplish with respect to your dividend portfolio? I look forward your Comments!