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Tuesday, December 22, 2020

Goals for 2021

In this article, I'm presenting my goals for 2021. 

I like setting goals that challenge me. Such goals demand extra effort and focus. They require commitment, patience, and constant monitoring. Sometimes, when progress is not sufficient, they require a course correction.

It is not beneficial to set goals that are easily achievable. Such goals are uninspiring and won't deliver a special sense of accomplishment. On the other hand, it doesn't make sense to set goals that are impossible. 

Assumptions and Commitments

Before presenting my 2021 goals, let me state some assumptions and commitments.
  • A: Reinvest dividends, on average at least $2,750 per month (at least $33,000 in 2021)
DivGro's projected annual dividend income (PADI) now stands at $32,809, which equates to a projected monthly income of about $2,734. Given that dividends will increase throughout the year, I think averaging $2,750 per month in 2021 is doable. 
  • B: Deposit premium article income from Seeking Alpha (goal is $5,400 in 2021)
Seeking Alpha changed their compensation scheme in November 2020, and I'm still unsure how that would impact my earnings from writing premium articles. It continues to be hard to reliably generate income in this way, so I'll just set a slightly increased goal for 2021. 
  • C: Deposit advertising income from Google Adsense (estimate of $600 in 2021)
My blog continues to produce a small but steady stream of income from Google Adsense. It is impossible to set a goal for this type of income, so I'm listing an estimate here and hoping my readers would click-through sometimes!
    • D: Retain and invest options income (goal is $24,000 for 2021)
    I failed to achieve my options income goal of collecting $24,000 in 2020, so I'm setting the same goal for 2021. Options income depends largely on volatility and what the market allows me to do, so we'll see how it goes!
    • E: Assume initial yield on cost (YoC) averaging 3.3% 
    In 2021, I'm planning on favoring investments with higher yields (without chasing yield!). This represents an increase of 10% over my 2020 target to average an initial YoC of 3%. I'll continue to increase this target over the next few years as I approach retirement.
    • F: Assume an annual dividend growth rate of 7.0%
    I'm not changing this assumption even though I'm not even sure if I actually achieved this dividend growth rate in 2020. The COVID-19 pandemic negatively impacted dividend increases in 2020, and we're not out of the woods yet!

    2021 Goals

    To determine achievable yet challenging goals, let's first look at what I can expect to invest in 2021.

    I'm not going to add new capital on a recurring basis in 2021. Instead, I'll add bonus deposits occasionally, options income as it is generated, and "passive" income from Seeking Alpha and Google Adsense. 

    Let's assume bonus deposits totaling $12,000, options income of $24,000, and passive income of about $6,000 in 2021, for a total of $42.000 of fresh capital in 2021. (B, C, D)

    Adding dividend income of $34,500 means I should expect to have about $76,500 available for new investments next year. (A)

    1. Increase projected annual dividend income to $37,500

    Investing $76,500 at an average initial YoC of 3.3% should add about $2,500 to DivGro's PADI. Given a dividend growth rate of 7%, my current PADI of $32,809 should grow to about $35,000 by the end of next year. So DivGro's PADI should grow to about $37,500 by the end of next year.  (E, F)

    Given DivGro's current PADI of $32,890, this goal represents an increase of about 14%.

    2. Earn $33,000 in dividend income.

    I'm estimating that my 2020 dividend income will add up to about $29,000. That easily tops my 2020 goal of collecting $27,000 in dividend income. Applying the same 14% increase (as with PADI above), dividend income of $33,000 should be achievable. (A)

    My 2021 goal would represent an increase of 14% over this year's probable total of about $29,000.

    3. Collect $24,000 in options income.

    For 2020, I'm repeating my options income goal of $24,000 after having failed to achieve that same goal in 2020. Options income remains tricky and largely depends on market conditions and volatility. (D)

    In hoping for a solid improvement in 2020 (and would love a repeat of 2019's achievement, when I collected $30,120 in options income!).

    4. Earn income of $5,400 writing premium articles. 

    Year to date I've collected about $6,600 for publishing premium articles on Seeking Alpha, easily topping my goal of $5,200 for 2020. Seeking Alpha changed their compensation scheme in November, and my income seems to have dropped a bit, so I'm not going to adjust this goal much higher for next year.  (B)

    My 2021 goal represents a modest increase of about 4% over last year's total. 

    Concluding Remarks

    I have two additional goals for 2021. These are binary goals, in that I can either achieve them or fail to achieve them. They're quite challenging but I'm looking forward to the challenge!

    A. Launch a Marketplace Service on Seeking Alpha.

    This goal revisits one I failed to achieve in 2018. This time, I have two collaborators that should make this daunting task easier than if I attempted it on my own!

    B. Move DivGro to Another Platform. 

    I launched DivGro on blogspot.com in 2013. After 8 years, I believe my needs have outgrown blogspot.com's capabilities, so I'm looking to move to another platform. 

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