Goal Setting – A Look at Forward 12-Month Dividends

Goal Setting - Forward 12-Month Dividends - Up and to the right

The Goal – Up and to the Right

I am of the opinion it isn’t enough to just set goals, but to track progress towards those goals, holding yourself accountable. Since starting WYOR, I’ve set goals three times, and have, albeit late at some points, publicly tracked my progress towards those goals. While public accountability is important for those inclined to blog, it is the act of tracking your progress and actively monitoring your goals that will carry you further. You can check out my 2014 Goals here.

But what to track and why? For someone like myself, this is a fairly straightforward decision as I blog about passive income generated primarily from peer to peer lending and dividend income. Each month I review the income produced by all of my investments as I continue driving and pursuing independence through the production of income. Of course, income is just one thing that can be tracked. Investments provide such a wide range of metrics in which to track your investments, that you can pick any one of many to base your goals on. An example of one metric used by those in the dividend growth community is forward 12-month dividends.

Calculating Forward 12-Month Dividends

As I alluded to above, forward 12-month dividends are one of the ways those investing in dividend paying stocks can provide a snapshot for the future dividend production of their portfolio. Boiled down, your forward 12-month dividend total is exactly that, a projection for the level of earnings your dividend growth portfolio will earn over the course of the next 12-months, without any additional contributions, reinvestment of dividend increases. While many fellow dividend growth bloggers track this metric as a goal, I currently do not. That being said, I do keep track of this metric and include this information in my tables reflecting my dividend growth portfolios.

The calculation process for forward 12-month dividends is fairly straightforward and takes just a little bit of portfolio maintenance to keep this updated as you make transactions. Using a small example portfolio below, you can see that I am taking the current number of shares owned per position, multiplying it by the current dividend and the number of payments in a year. The result of this is the projected dividends to be received by each position over the next 12-months. I’ve kept the portfolio fairly simple below, but this can be integrated into any Excel tracking file you might currently have or utilize.

Goal Setting - Forward 12-Month Dividends - Sample Portfolio

Note that when you calculate your forward 12-month dividends, you are taking a snapshot of your current portfolio as it will change with reinvestments, dividend increases, additional purchases, and adjustments in the payment frequency (very rare). Effectively, this snapshot reflects the passive income your dividend growth portfolio will produce over the next year, a truly important calculation for those looking to gain financial independence through this method of investing.

When tracking your forward 12-month dividends, it can be a great feature to visualize how your portfolio is improving over time. Below is a chart of my forward 12-month dividends mapped against the actual dividends I’ve received over the last 14 months (January 2013-February 2014).

Goal Setting - Forward 12-Month Dividends - Dividends Received and Forward 12-Month Dividends

With regular contributions, reinvestments, and dividend increases, any dividend growth investor can see significant gains in their forward 12-month dividends and over time should see the trend line for their growth accelerate and increase at an exponential rate.

Do you track your forward 12-month dividends? What goal setting metrics do you find most useful?

Flickr: Peter576

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  1. I do have a goal for forward dividends just because I want to make sure I’m on target with my projections to reach FI. It’s great to see those forward dividends to continue to increase month after month. I should probably start having a visual of it but that would require going back through all of my old dividend income posts because I never kept track of the final amount at the end of each month.

    • Certainly the visual is nice, but ultimately it is knowing where you stand in relation to financial independence and what margin of safety your income stream will provide over the upcoming years.

      Appreciate you stopping by JC!

  2. I have goals of forward dividends. Right now it’s just a number. A small number. haha. But ya…i’m not going to pay too much attention until I probably hit $1200 in forward dividends, which avgs $100/month. Then I know it will start to soon snowball fairly quickly afterwards and get me that closer to FI.

    • Small or large, goals are important! The fact that you are tracking your progress and setting goals will carry much further than those who haven’t done the same.

      Best of luck with your growing snowball Richie!

  3. This is a great point and unfortunately not something that a lot of people know is possible. I keep track of my 12 month forward dividends but I can’t wait to see them 30 years down the road =)

  4. Love the graph and organized approach you take. I’m with you and not only set goals, but try and keep track of my progress each and every month. At the end of the year I review and check to see if I met my goals.

    I don’t take it too hard if I fail to meet them, but I’d be a lot more disappointed if I failed to even attempt it. This year, I set goals I don’t think I’ll even hit. Aim high b/c you just never know! ;)

    • Failure is an accepted part of goal setting. As they say, when you reach for the stars and miss, you still might get the moon. I’m happy to set challenging goals, because I know I am motivated to push to reach them.

      I love the chart as well; one of my favorites for sure. Thanks for your support and stopping by FI!

  5. Thanks for the explanation! I don’t have any goals on my forward looking dividends, but I use my historical data instead: Ex: I got $100 in dividends in 2013, so I need to put X more money into the account to get my income goal from dividends.

    • Not a problem! Happy to have posted it since you asked. I, like yourself, focus my goals on the income actually received, but see the value in tracking both.

      Thanks for the question and for stopping by!

  6. Thanks for another great read and I like how you showed the calculations. I don’t know why, but my favorite thing after buying a stock is seeing my forward 12 month dividend increase a little bit on the spreadsheet. It’s probably because my portfolio is still so small and each increase seems like massive progress.

    Wishing you the best!

    • It is quite rewarding to see how each purchase builds on one another to really grow the forward 12-month projection. A pretty tangible view of how impactful each purchase is in the near term and what it can become in the long-term.

      Thanks for the support and stopping by Ryan!

  7. It’s great to track the forward 12 mth dividend income, particularly if one is adding a lot of fresh capital in a very short space of time. I went through this last year in my US portfolio and had no idea how rapidly my dividend income grew during that period!

    • I could think of worse things than the unexpected surprise that I had faster than expected stream of passive income! :)

      I agree forward 12-month dividends is one of many great tools to track your portfolio, and certainly one I track. Thanks for stopping by Intergrator!

  8. W2R, nice post. I do the same on my block and I love to see when I purchase a new stock or increase my existing holdings how that affects my annual dividend income. It’s great to see when I buy a few shares and those can increase my income by 80 or 100 more dollars annually. Looks a lot better than when you take a look at a quarterly dividend itself. Love it!

    • Definitely a great feeling to watch each purchase have an impact on the future earnings of the portfolio. It is one of the more addictive and motivating features of investing with a dividend growth strategy.

      Appreciate you stopping by Martin!

  9. I haven’t tried calculating forward P/E yet…seems like something that would be REALLY important when one turns off dividend reinvestment and starts using the stream of income to live.

    • Absolutely a great means of seeing where your portfolio stands from a forward looking perspective, which can be helpful at any point. Additionally, it is a number that is improved with every purchase and every reinvestment. A pretty phenomenal tool and measurement for all dividend growth investors.

      Appreciate your stopping by Evan.


  1. […] A Look At Forward 12 Month Dividends – WYOR talks about tracking your progress with the goals you set. For dividend investors this is done by calculating your forward 12 month dividends.  If an investor were to do this every perhaps every quarter they could stay motivated by seeing their progress. […]

  2. […] saw a post by a blogger named Write2Reality who wrote about calculating/projecting his forward 12 month dividends that got me thinking whether this is useful data for most.  Despite not agreeing with W2R I would […]

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