Dividends4Life: Investing Goals

Investing Goals

Posted by D4L | Saturday, December 01, 2007 | , | 6 comments »

This article appeared in the 1st Carnival of Financial Goals - 2008 Resolutions Edition.

Public goals and progress reports are a long-standing tradition in the world of personal finance blogs. As I conclude my first month of blogging, I have given much thought as to what I would put out in the public domain as my goals and how to report progress on them.

I considered net worth, but rejected it since much of my net worth is tied to employee stock options and my company's stock. Thus, the two main drivers of my net worth are the annual vesting of options and share price movements in my company's stock.

Since the focus of Dividends4Life is on the dividend income portion of my portfolio, it seems only logical that the selected goals and progress report should be tied that. The obvious objective of dividend investing is to generate dividend income, so annual dividend income will be one of the metrics I will report on. As noted in my recent article Yield on Cost: Measuring for Success, I consider Yield on Cost (YOC) an important metric, so it will be the other metric I will report on.

In the table below are my 2008, 2017 and 2027 goals, along with my Nov/2007 actual results.

A couple of important items to note:

  1. YOC will be more sensitive to the yields of what I am buying, versus dividend increases in the early years due to relative size of the purchases versus the portfolio size.

  2. I am being somewhat conservative with the YOC, particularily in 2027. Assuming no additional purchases, my model calculates a YOC for 2027 of 46.75%.

As time goes by and I have more historical data points, I will be in a much better position to more accurately model future projections. For now it is a stake in the ground, and I am ready to pursue it!

Have you set your 2008 goals yet?

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  1. Anonymous // December 1, 2007 at 8:23 AM

    D4L, Congrats on making these goals public...

    What avg. annual percentage increase in dividends are you projecting to reach these?

    Have you revealed your stock holdings anywhere here? If not, do you plan on revealing them?

  2. D4L // December 1, 2007 at 9:30 AM

    MG: I am fairly anal, so I calculate it on a security by security basis and am always tweaking it when new information becomes available. I am glad you asked today, since it might change tomorrow. Here is what I used in arriving at my goals:

    ACAS... 6.9%
    AFL.... 20.0%
    BAC.... 12.4%
    BBT.... 9.5%
    DHI.... 20.0%
    ED..... 0.9%
    FR..... 0.9%
    GE..... 8.7%
    HCP.... 1.6%
    HD..... 20.0%
    KO..... 9.5%
    MCD.... 20.0%
    MTB.... 15.6%
    NNN.... 1.2%
    O...... 4.8%
    PAYX... 18.5%
    PFE.... 16.9%
    PGN.... 0.4%
    RY..... 20.0%
    SFI.... 5.3%
    STI.... 10.1%
    WM..... 15.0%
    WMT.... 20.0%
    SDY.... 13.5%
    VFH.... 20.0%
    VIG.... 20.0%
    VNQ.... 2.5%
    VYM.... 20.0%

    I cap-out the rate of increase at 20%. Those are my dividend stock holdings (also shown in the table on the right sidebar). As noted in the link above the sidebar table, it is not a recommendation to buy these stocks. Some of the stocks listed I have classified as hold, thus I am neither buying or selling. For some others listed, I am waiting for the appropriate exit point. For all others, I am actively buying.

    Best Wishes,

  3. Anonymous // December 1, 2007 at 10:49 AM

    Thanks D4L,

    Those growth rates seem aggressive.

    Just quickly looking at your list, do you think DHI and HD can maintain dividend growth rates of 20% in this environment?

  4. D4L // December 1, 2007 at 11:07 AM

    MG: These growth rates are based on the last 10-years. I them use to estimate the next 20 years. Looking in the near-term I would expect most of them to be lower.

    HD and DHI are heavily tied to residential which will be be ugly in 2008. Given their market presence, I think both are well posited for growth when residential returns in late '08 or early '09. My concern is if DHI can maintain its dividend in 2008 given its cash position.

    Best Wishes,

  5. Anonymous // December 20, 2008 at 10:11 AM

    You hold a lot of financial and banks it seems, have you bought recently or did you take the bath from the meltdown?

  6. Anonymous // December 20, 2008 at 10:31 AM

    Bill M: Most of my financials I have held for some time now. I have added some during the recent melt-down. My maximum allocation of financials is 155, but I am currently under 10%.

    Best Wishes,

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