7 Dividend Investing Goals Dividend Investors Should Set Now

It’s Always A Good Time To Refresh Your Dividend Goals

Every good dividend investor should set short-term and long-term dividend investing goals. As a result, I would like to provide some ideas for your dividends goal-setting consideration.

Let’s get moving, so you can start working on your dividend goals.

Dividend Investing Goals For Dividend Investors

My suggested seven dividend stock goals are:

  1. Fine-tune your dividend investing strategy
  2. Revisit your allocation between stocks vs. funds
  3. Add fresh capital to your dividend portfolio
  4. Increase dividend income and dividend growth potential
  5. Improve dividend safety
  6. Achieve solid total investment returns
  7. Learn more about dividend investing

Next, I will discuss these dividend goals in greater detail, doing so one at a time.

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Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.

1. Fine-Tune Your Dividend Investing Strategy

First, every dividend investor should have a dividend strategy. Furthermore, whether you know it or not, you have one.

However, it’s wise to be intentional about it. Thus, allowing your strategy to guide your investment decisions.

There are three dividend strategies you should consider. They are:

  • High dividend income – low growth
  • High growth – low dividend income
  • Balanced growth and dividend income

Then with an intentional investing approach selected, invest in dividend stocks that fulfill your chosen strategy.

Furthermore, it’s essential to understand that your objectives may change over time as your goals for your dividend portfolio evolve. However, keep your selected strategy the same over the long run. Thus, short-term consistency is critical.

Check out this post for a complete review of dividend-investing strategies.

2. Revisit Your Allocation Between Stocks Vs. Funds

Next, decide if you want to be an active investor, a passive investor, or a blend of both.

Active investors pick individual dividend stocks. In contrast, passive investors prefer owning funds that make their stock selections for them.

However, there is nothing wrong with a blended strategy. For example, I own individual stocks and index funds that pay dividends.

Perhaps you thought you would be a stock picker. Then after a while, realize you need more time to do it justice. Thus, you desire to shift your strategy to funds.

If that’s the case, check out this post about five excellent Vanguard dividend ETFs.

Conversely, you may have started dividend investing with one or more dividend funds but now want to start picking stocks. That’s okay too.

For some ideas, this article is about 30 stock ideas for a dividend portfolio.

3. Add Fresh Capital To Your Dividend Portfolio

Next, I have one of the best short-term dividend investing goals. Simply put, add more money to your dividend stocks regularly.

Whether you have $10 a month available for investment or $10,000, you can’t go wrong making wise additions to your dividend portfolio.

Thus, take a hard look at your monthly budget. Determine how much you have to invest each month. Then make it happen.

Another way to add to your portfolio is to reinvest your dividends. But only if your dividend income goals do not include funding current living expenses with the dividend cash flow.

However, don’t just take my word for it right now. Do your research.

To lend a helping hand, check out this article covering the pros and cons of reinvesting dividends.

4. Increase Dividend Income And Dividend Growth Potential

Adding new money and reinvesting dividends will almost always grow your future dividend income.

I suggest playing around with your numbers by estimating:

With these inputs, you can estimate your dividend income for next month, next quarter, or next year. Thus, set a dividend income goal and track your progress.

Watching your pay from dividends grow over time is fun and motivating. At least it is for me!

Feel free to dig deeper into these methods to increase your dividend earnings.

Or stick with me now. This next point is important.

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5. Improve Dividend Safety

One thing that will blow your chance of achieving your dividend income goals is risky dividends. Specifically, those risky dividends that result in dividend reductions.

I want to make a couple of points on this topic.

First, investing in stocks with higher dividend yields tends to expose a dividend investor to lower dividend safety. So, be careful when pursuing the high dividend income – low dividend growth strategy from point number 1 in today’s discussion.

Second, the dividend payout ratio is my preferred measure of dividend safety. This ratio is the percentage of financial resources a company pays out to investors in the form of dividends.

All things being equal, a lower dividend payout ratio improves the overall safety of your dividend income stream. Furthermore, most dividend stocks with very high dividend yields come with higher dividend payout ratios.

Of course, all things are rarely equal.

So, understand that evaluating dividend payout ratios is partly mathematics. Plus, a helping of good judgment by a dividend investor.

To explore this topic more fully, check out this article discussing good dividend payout ratios versus risky ones.

6. Achieve Solid Total Investment Returns

This next point is one of the best long-term dividend investing goals. Achieving this objective is essential for attaining financial freedom with dividends.

Please allow me to explain.

Your growing dividend income stream should only be one part of your dividend investing goals. The other part is achieving acceptable total investment returns.

I shoot for an annual average return of 10% from my dividend stock portfolio.

However, during the short term, a down period in the stock market can wreck this goal. That’s why I consider it a long-term objective.

Why 10% Annual Average Returns From Dividend Stocks?

Financial theory suggests that your portfolio’s dividend yield plus its dividend growth rate from dividend increases is an estimate for future total annual returns.

For example, build a portfolio of stocks with a 3% dividend yield and a 7% dividend growth rate. Then you “should” be able to earn an average annual return of 10%.

Coincidently, a 10% annual return is what stock investors have earned by investing in the U.S. stock market over history.

However, past performance and academic theories do not guarantee future performance. Thus, you must fully understand that investing in dividend stock has risks.

What risks? The risk is that you lose some or all of your original investment.

On the other hand, history is on your side. Only in rare circumstances have long-term individual investors lost money in stocks assuming:

  • Wise stock or fund selections
  • Staying invested over the long term

Get these fundamentals right, and you may earn good money with dividend stock investing.

7. Learn More About Dividend Investing

My last proposed goal for dividend investors, especially beginners, is to continue learning.

To help, I linked to several of my supporting articles throughout this article. Check them out to dive deeper into the topic or topics of your choice.

Or, for a good dividend investing course, I recommend:

Passive Dividend Income Investing

It is an excellent course offered by Simply Investing providing all the knowledge and tools to achieve your dividend stock investing goals.

Okay. That completes my review of dividend goals.

So, allow me to wrap up with a few parting thoughts.

Achieving Dividend Investing Goals

Achieving your dividend goals come down to a few fundamental principles.

First, choose a strategy, pick wise investments, and invest regularly. Second, hold for the long term and watch your dividends grow.

That’s all for now. Thanks for reading.

Before you go, feel free to browse my:

Dividend Stock Investing Article Archives

The archives are a perfect place to find dozens of tips and tricks about investing for dividends.

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Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.

Best Dividend Investing Goals Fully Explained