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+--- Thread: Measure of Progress (/showthread.php?tid=280)
Measure of Progress - KenBob - 11-03-2013
We all need some means of seeing progress in our investing. Most people measure the market value of their portfolio compared to some goal, which I frequently find more depressing than supportive. Many dividend growth investors use yield on cost, which can prevent people from selling a stock when they should.
I propose another measure of progress: reinvested dividends as a percentage of the total invested in a year. This measure isn't actionable, but does provide psychological support for continued dividend growth investment.
By this measure, 15% of my annual investments are reinvested dividends.
RE: Measure of Progress - Kerim - 11-03-2013
That's a pretty interesting idea, KenBob. I think most of us probably track a whole range of portfolio metrics, and a couple of things that I look at are in the same ballpark as the one you suggest, but not nearly so formalized.
I keep track of how much I paid out of pocket for all of the shares in my dividend growth portfolio, and also the current market value of just those original shares. But then I also track the value of my portfolio with reinvested shares. So for example (just using made-up numbers), say that over the years I paid $100,000 out of pocket for all of the original 3000 shares in my portfolio. Now those original 3000 shares are worth $125,000. But I also keep track of the portfolio with reinvestments, so now I actually own 3250 shares of my various companies, with a total market value of $135,000. So I've got some broad metrics with and without reinvestment.
And more to your point, if my portfolio is generating, on average, say, $500 in dividends each month, and I am contributing $1000 of new money each month, then my monthly "KenBob Number" would be 33 percent ($500 / $1500). This number should naturally climb over the years as your portfolio builds and the snowball effect takes hold. So in a sense, it could be a measure of the maturity of the portfolio. But only if the investment of new money is very consistent over the years. If you had to raise cash for a major unexpected event and you had to stop investing new money for a while, your KenBob Number would shoot up to 100 percent.
RE: Measure of Progress - Dan Mac @DGSInvesting - 11-04-2013
I keep track of a few measures. The most important for me is that my dividend income is going up each year. I compare year over year income #'s along with each quarter compared to year ago quarter. I expect these #'s to keep increasing.
Along with that I keep track of total return of my portfolio. This takes into consideration capital gains and dividend income. This is my most important metric which I like to see ideally above the S&P 500 performance.
Other than those two things, I just make sure each company I own continues to increase it's dividend on a yearly basis. As long as they are doing that I am a happy investor.
RE: Measure of Progress - hendi_alex - 11-04-2013
I track my YTD performance, but really pay little attention to it any more. After all, saying that my goal is to gain at least 8% or stating a goal of at least out performing the S&P500 is pretty meaningless. I can make my call, invest the dollars, and what comes, comes with probably about equal chance of meeting such stated goals.
My current target is to at least replace any distributions that are taken during the year. That can happen through capital gains, dividend and interest income, and fresh money being put into play. If the market treats me badly, then I'll just try to put some of the distributions back into the pot, so that there is no net draw down.
As long as I'm able to follow my plan of adding the social security checks to the investment portfolio, I'm expecting each year for the nest egg to grow, regardless of portfolio performance and regardless of distributions. For me that is all that really matters, having the nest egg grow so that the dividend stream grows, hopefully growing to the extent that inflation is mostly offset.
So bottom line for me for this year simply boils down to how the closing NAV of December 2012 compares to the closing NAV of December 2013. The investing goals will only be used to help tweak my various strategies.
RE: Measure of Progress - cannew - 11-04-2013
(11-04-2013, 10:57 AM)Dan Mac @DGSInvesting Wrote: I keep track of a few measures. The most important for me is that my dividend income is going up each year. I compare year over year income #'s along with each quarter compared to year ago quarter. I expect these #'s to keep increasing.Totally agree! It's the growing income I watch and work to achieve. All else I monitor is just to keep busy and support the income growth.