The first quarter of the year is over. Let's see where we are and where we need to go.
So my main goal this year when I started this blog was to achieve a dividend income level of $2000. What I mean by this is that I want to get my portfolio to the point where it would produce $2000 in the following 12 months. The reason I use this metric instead of current year dividends is that I want to know what dividend income to expect if I stopped reinvesting dividends right now. So right now I'm at $1300. I need $700 more in yearly dividend producing income. Some of this could come from dividend increases but the majority of this will be through new purchases. If the stocks I purchase average 3.5% yields then I will need to purchase $700/.035 or $20,000 worth of stock. If they average 3% yields then I will need to purchase $700/.03 or $23,333.33 worth of stock.
The main issue will be to find high quality stocks that aren't too overvalued at this point. Let's face it, the market has had a huge run-up since last fall. As the market continues to rise faster than dividend growth rates the dividend yields start to fall. This means I will have to spend more money for the same amount of income unless I increase my risk profile. I'm hoping for some sort of a correction. I have a feeling the majority of my purchases will be in the second half of the year.
I'm also saving for a home purchase within the next 12 months and have a few trips planned including going to Germany in the fall. I want to do some traveling before I have kids. It's tough sometimes to manage having a life and being a dedicated investor. This could throw a damper on my goal but I think I will still be able to manage it.
Some stocks I'm currently watching: WAG, COP, UGI, VOD, LMT, UL, RTN, MCD, HAS, TGH, WMT, PEP, BDX, AFL
So my main goal this year when I started this blog was to achieve a dividend income level of $2000. What I mean by this is that I want to get my portfolio to the point where it would produce $2000 in the following 12 months. The reason I use this metric instead of current year dividends is that I want to know what dividend income to expect if I stopped reinvesting dividends right now. So right now I'm at $1300. I need $700 more in yearly dividend producing income. Some of this could come from dividend increases but the majority of this will be through new purchases. If the stocks I purchase average 3.5% yields then I will need to purchase $700/.035 or $20,000 worth of stock. If they average 3% yields then I will need to purchase $700/.03 or $23,333.33 worth of stock.
The main issue will be to find high quality stocks that aren't too overvalued at this point. Let's face it, the market has had a huge run-up since last fall. As the market continues to rise faster than dividend growth rates the dividend yields start to fall. This means I will have to spend more money for the same amount of income unless I increase my risk profile. I'm hoping for some sort of a correction. I have a feeling the majority of my purchases will be in the second half of the year.
I'm also saving for a home purchase within the next 12 months and have a few trips planned including going to Germany in the fall. I want to do some traveling before I have kids. It's tough sometimes to manage having a life and being a dedicated investor. This could throw a damper on my goal but I think I will still be able to manage it.
Some stocks I'm currently watching: WAG, COP, UGI, VOD, LMT, UL, RTN, MCD, HAS, TGH, WMT, PEP, BDX, AFL
$2000 is a nice goal for a year-end dividend income level. At the start of this year my projected dividend income for 2012 (based on existing dividend rates at the time) was $1200, which is why I set a goal to receive $1300 in dividends in 2012. The extra $100 would have to come from dividend increases and additional dividends from stocks purchased with new capital. Based on the purchases I've made thus far this year, my projected dividend income for the next 12 months is nearly $1500. I don't have a year-end target, but $2000 seems within the realm of possibility for me, too.
ReplyDeleteI share your feelings about the state of the market right now. Good undervalued stocks are harder to find, so I have been looking more closely at stocks that might be considered fairly valued. I'm also hoping for a correction, but I do try to stick to a routine of making at least one purchase each month regardless of what the market is doing.
It can be tough balancing your investment goals with the rest of your life, but I think it is important to fulfill certain life goals such as traveling. This summer I will likely go on one or two road trips to visit distant friends. Those trips will use up some savings that would otherwise be invested, but I think it is okay to engage in occasional discretionary spending to enhance one's quality of life.
Thanks for the comments. It seems we are on the same pace for this year and have a similar sentiment about the market. I too will probably make at least a purchase per month regardless of what happens. I'll be cautiously watching a handful of stocks over the next few months though.
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