Tue. Dec. 28, 2010

2011 Investing Goals *

My goals were originally defined in this December 1, 2007 Investing Goals post and last updated in my 2010 Investing Goals. Unlike last year when I will fell short of my goal, I will greatly exceed my 2010 goal of $9,500 in annualized dividend income. Looking at my long-rang goals, I am still on track to reach my 2017 goal of $30,000 and based on my latest model, I could reach it in 2014. The 2027 goal of $110,000 is not as clear. Given the increased prices and lower yields of new investments, my model is currently indicating this could be difficult to make.

The tough financial environment we experienced over the last 2 years has helped me focus on higher quality stocks and in turn, my income portfolio is better equipped to handle  the inevitable downturn. As valuations increased, current yields declined prompting some income investors to chase higher-yielding and higher-risk stocks. My income portfolio’s 2010 risk rating will end very close to where it was in 2009.

Looking to 2011, I don’t see it much differently than 2010, with the possible exception of a correction sometime during the year.  I always welcome a correction as a buying opportunity. 2010 had fewer dividend cuts, I anticipate a similar level in 2011. On the plus side, I suspect 2011 will will see fewer companies failing to raise their dividends (dividend freezes). With that as a backdrop here are my updated goals going into 2011:

Description Dividend
on Cost
2027 Goal 110,000 10.00%
2017 Goal 30,000 5.80%
2011 Goal 15,500 4.70%

I left the income goals for 2027 and 2017 goals unchanged. However, it is very apparent that I will not make the YOC  targets for 2027 and 2017. I lowered 2027′s YOC from 20% to 10% and lowered 2017′s to 5.8%. I am setting my 2011 annualized dividend income goal at $15,500. To achieve this goal, I anticipate more robust dividend growth than we have seen in the last two years. The 2011 yield on cost of 4.70% assumes significantly lower dividend declines from holding less income ETFs with volatile dividends.

I am confident that I will finish 2011 with higher annualized dividend income than where 2010 ended. In addition, I feel good that my string of sequential months of higher annualized dividend income will continue through 2011.

If it were easy, everyone would do it and success wouldn’t be nearly as satisfying. Here’s to an exciting 2011!

(Photo: sanja gjenero)

8 Responses to “2011 Investing Goals *”

  1. Bill66 says:

    The curent low dividend yield of many stocks is a great headwind (and ought to be a great caution sign) for income investors. The S&P 500 yield, for example, is south of 2%. And, with the exception of the height of the Great Recession panic, the S&P 500 yield has been below 2% percent for 15 years.

    Visit http://www.multpl.com/s-p-500-dividend-yield/

    In contrast, the longer-term average yield is 4-percent-plus.

    Makes you wonder how dividends yields will revert to their mean. I can think of two ways. And one of them is ugly.

    Our host wished us an exciting 2011. He surely intended well, but as always, be careful what you wish for.

    Happy New Year!

  2. D4L says:

    Bill66: As with most long-term investors, I would welcome a correction. Buying when everyone is fleeing the market is where the most value is created.

    Best Wishes,

  3. MB says:


    What about timming and scaling of positions?
    For example, when you look at XOM and you wanted to get in, would that stock look a bit on the high side for dividend investing? Or would that not mater, in that you would scale in throughout the course of the year?

    I know yield is important and one should be patient, but theoretically, would it be just buying the dips?

  4. D4L says:

    MB: XOM is one of the 198 stocks I track. I would love to own it, but its dividend fundamentals and valuation have never been where it would cause be to buy. Yield is only one of many things I look at.

    Best Wishes,

  5. Bill66 says:

    I am sure you will get your correction. Precisely when, of course, is unknown. And yes, opportunities may present themselves. Your point is well-taken.

    Headline (and story) du jour: Financial Times says retail investors (don’tcha love the term) are “holding their nose” and “entering” the market. Oh my.

    But, under the equal time provision: FT columnist on the same page wound up a lengthy spiel by saying that “quality” stocks are among the best of the overall unattractive investment choices currently available. (The other least bad choice being carefully selected commercial real-estate offerings.)

    Quality stocks? Gee, somebody ought to start a blog writing about such stocks.

    Happy New Year.

  6. Manefla says:

    Hi D4L,

    I’ve two questions,
    - your income goal for 2027 of 100.000 dolars is in present value or in 2027 value?
    - how much is your expected expense for retirement?

    Very truly,

  7. D4L says:

    Manefla: My 2027 income goal is in nominal dollars. It is hard to gauge exactly what my expenses in retirement will be. The will likely be higher than my dividend dincome, with the difference being made up with my company’s pension, 401(k), social security and other savings.

    Best Wishes,

  8. Manefla says:

    Thank you very D4L much for the answers.

    Very truly,