Sunday, December 16, 2018

Goals for 2019

I believe in setting stretching but achievable goals.

It is not very useful to entertain goals that are easy to achieve. Such goals are not inspiring and they don't require special effort. And achieving an easy goal won't give you a special sense of accomplishment.

On the other hand, setting goals that are unachievable or impossibly hard is not useful either. Doing so just sets you up for failure.

Stretching goals demand extra effort and focus. They require commitment, patience, and constant monitoring. Sometimes, when progress is not sufficient, they require a course correction.

In this article, I'm presenting my goals for 2019.

Assumptions and Commitments


Before presenting my 2019 goals, let me state some assumptions and commitments.
  • A: No recurring capital deposits in 2019 
We have some extraordinary financial commitments in 2019. We'll need to replace the windows in our house and two of our sons are getting married in the summer! When possible, I'll make bonus deposits to boost DivGro's capital. 
  • B: Reinvest dividends, on average at least $2,000 per month (at least $24,000 in 2019)
DivGro's PADI now stands at $23,117. Given that dividends will increase throughout the year, I think averaging $2,000 per month in 2019 is doable. 
  • C: Deposit premium article income from Seeking Alpha (goal is $5,200 in 2019)
I'm on track to earn about $5,200 in premium article income from Seeking Alpha in 2018. Unfortunately, Seeking Alpha continues to adjust its compensation scheme and I find it difficult to estimate potential earnings. So I'm assuming a repeat performance in 2019.  
  • D: Retain and invest options income (goal is $21,000 for 2019)
Through November 2018, I earned an all-time total of $39,205 in options income, versus $20,263 through November 2017. So I collected nearly $19,000 in options income in the twelve months ending on 30 November. I'm assuming a rather modest increase of about 10% for 2019. 
  • E: Assume initial yield on cost (YoC) averaging 3.5% 
DivGro's initial YoC averages about 3.5% and I think I can continue averaging that initial YoC.
  • F: Assume an annual dividend growth rate of 6.5%
I think an effective dividend growth rate of 6.5% is reasonable for 2019. DivGro's average dividend increase seems to be higher than last year, so I'm comfortable assuming a slightly higher growth rate.

2019 Goals


To determine achievable yet stretching goals, let's first look at what I can expect to invest in 2019.

Fresh capital should include $5,200 from Seeking Alpha income and $21,000 from options income, for a total of $26,200. Let's assume bonus deposits totaling $9,800. So cash contributions should total $36,000 in 2019. (A, C, D)

Adding dividend income of $24,000 means I should expect to have about $60,000 available for new investments next year. (B)

At an initial YoC of 3.5%, new investments of $60,000 will produce about $2,100 in additional dividends. (E)

1. Increase projected annual dividend income to $27,000

DivGro's PADI of $23,117 should grow to at least $24,620 due to dividend increases. If I add dividend income of $2,100 from new investments, then DivGro's PADI should grow to about $26,720 in 2019. (E, F)

To make the goal more challenging, I'll round up to $27,000.

Since I'll be starting at $23,117, this goal would represent an increase of about 17%.

2. Earn $25,200 in dividend income.

For 2019, I should earn at least $24,000 in dividend income. Accounting for dividend growth ($1,500) and additional dividends ($2,100) is tricky because dividend from new investments will have a lag of at least one quarter. (B)

To account for the lag, I'm adding only 33.3% of the $3,600 for 2019, or $1,200. This sets a challenging dividend income goal of $25,200.

It looks like I'll earn dividend income totaling about $20,970 in 2018 — so $25,200 would represent an increase of about 20%.

3. Collect $21,000 in options income.

My high expectations for options income in 2018 did not quite materialize, as increased volatility made options trading (and securing options income) somewhat tricky.

It looks like I'll be falling way short of my 2018 goal of securing $12,000 in options income. Through
November 2018, I've secured only $5,902 or about 50% of my goal. With only December to go, I'd be happy to hit 60%!

For 2019, I'm setting an options income goal, rather than a secured options income goal (which is harder to control). And I'd be happy to repeat my 2018 performance of collecting options income of $19,000. (D)

4. Earn income of $5,200 writing premium articles. 

Year to date I've collected about $5,000 for publishing premium articles on Seeking Alpha. This is disappointing, as I had hoped to earn about $6,000 in 2018.

Seeking Alpha's compensation scheme now adjusts monthly and depends on collected revenues. While the new scheme makes sense from a business perspective, it makes setting an income goal tricky. That's why I'm setting a conservative "repeat performance" goal for 2019. (C)

5. Write 12 stock analysis articles. 
    One possible way to increase premium article income is to write more primary ticker articles. Some tickers are eligible for higher baseline compensation (guaranteed income versus variable income based on pageviews).

    So, rather than setting another goal of writing some number of premium articles, I want to write more primary ticker articles in 2019. For the most part, I anticipate these articles to be stock analyses.

    Thanks for reading! Are you setting achievable yet stretching goals for 2018? Feel free to share your goals and to comment on mine! All the best for 2018 and thanks for your support!

    8 comments :


    1. Yes, this is a good idea to set goals that we can achieve. I've already formulated my goals for 2019, which I want to achieve. Just get more dividend revenue so far. We had a good year behind us and I think we made several good purchases this year. I hope we can continue this trend next year.

      ReplyDelete
      Replies
      1. Thanks for commenting! In addition to setting stretching but achievable goals, I think it is important to set specific, measurable, and time-based goals. I'm not sure what your formulated goals are, but specific and measurable means something more than saying "just get more dividend revenue".

        Delete
    2. DG -

      Solid, tough, but you can do it. Stay on an automatic/consistent approach.

      -Lanny

      ReplyDelete
      Replies
      1. Thanks, Lanny -- I appreciate the comment and encouragement! All the best for achieving your goals next year!

        Delete
    3. You've got some great goals FerdiS! I am a firm believer in setting stretch goals as well, while balancing that against being unrealistic. Another thing that I like to do is reset the bar if I do achieve a goal earlier than planned to continue pushing myself.

      That is quite the impressive amount of options income. I haven't started with options yet, and don't feel comfortable getting my feet wet in this market right now but I will most likely be creating a goal around that for myself.

      With the changes at SA, would you recommend that as a platform for someone that has never written there before and has no current following? I have started to investigate that as a potential 2019 goal as well, but am currently battling the self-doubt that I have the analysis / writing chops to succeed there.

      All the best on your goals!

      ReplyDelete
      Replies
      1. Hi, Divvy Dad -- thanks for your comment, I really appreciate it.

        The market is getting tricky for options, for sure. I'm trying to keep a finger on the pulse of the market, but things seem to be moving rather quickly. I've had a few assignments lately, so those make for interesting, if not challenging, times.

        I would give SA a try if I were you. Write a couple of articles and see what happens. I wouldn't despair if you don't succeed at first. The editors usually give you a good indication what needs to be improved for publication eligibility.

        All the best to you and good luck!

        Delete
    4. $27,000 in dividend income is an impressive achievement. Out of interest, do you still have a full time job?

      Good luck with your goals in the new year!

      ReplyDelete
      Replies
      1. Hi, Dominic -- thanks for your comment! Yes, I'm still working full-time...

        Take care and all the best to you for 2019!

        Delete

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