Dividend Harvesting Portfolio Week 107: $10,700 Allocated, $862.30 In Projected Dividends (2024)

If you have followed this series on Seeking Alpha, you might wonder how I increased my projected dividend income by $37.30 or 4.52% by only investing $100 in week 107. After Intel Corporation (INTC) reduced its dividend, I had said once shares get past $30, I was exiting the position as the sub 2% yield doesn't fit well in this portfolio. INTC climbed past $30 in week 107, and I exited my position for $437.02 and reallocated the capital in addition to the weekly $100 cash infusion into this portfolio. I will write a section about this right after the week 107 addition section.

The markets have been fluctuating hard, and after week 107 and $10,700 allocated, the balance of the Dividend Harvesting Portfolio is still in the red with a balance of $10,130.22. The account is down -$569.78 or -5.33% on invested capital. In week 107, I collected $6.84 in dividend income from 12 positions. In 2023 I collected $174.06 in dividend income, which is 35.47% of the total dividend income generated in 2022. In week 107, I purchased 1 share of the JPMorgan Equity Premium Income ETF (JEPI), 3 shares of Medical Properties Trust (MPW), and 4 shares of New York Community Bancorp (NYCB). In week 107, my projected annual dividend income increased by $37.30 or 4.52%, which is a forward yield of 8.51%.

I allocate capital toward big tech, funds, dividends, and growth outside of my retirement accounts. These are not my only investments, but I did open a separate account, so I could easily track and document this series. I intentionally created broad diversification throughout the Dividend Harvesting portfolio so I could benefit from sector rotations and mitigate my downside risk. Investors who are too exposed to growth companies or large-cap tech have gotten crushed as the investment landscape changes. On the growth and tech side of my investments, I'm feeling the pain as some of my favorite companies, including Alphabet (GOOGL, GOOG), Amazon (AMZN), and Meta Platforms (META), have been taken to the woodshed.

I'm going to address a question that continues to surface. I'm not trying to beat the market with this portfolio. I love index funds and am invested in several index funds. I love dividend investing due to the stream of cash flow it generates. I don't want 100% of my assets outside of real estate tied to an S&P index fund. I have created a personal investment strategy that works to achieve my investment goals, and having a stream of income generated from dividends is part of my investment strategy. Low-cost index funds are one of the best investments anyone can make in my opinion, and the Dividend Harvesting portfolio is not meant to be a substitute for an index fund. I have read many questions about dividend investing and wanted to start a portfolio from the ground up and document its progress to disprove many misconceptions, including that you need a large amount of seed capital to make dividend investing work for you.

This series has never been about hitting a target yield, generating a certain amount of profit, or beating the market. I had two specific goals with this series. The first was to create a blueprint for constructing a dividend portfolio by documenting the journey starting from the beginning. The second goal was to illustrate how allocating capital each week toward investing, regardless of the amount, would be beneficial in the long run.

Too many people are under the illusion that you need tens of thousands or even hundreds of thousands to benefit from investing. Instead of using my real dividend portfolio as an example, I decided to start a new account, fund it with $100, and add $100 weekly, providing a step-by-step guide to dividend investing. This methodology doesn't have to be used for dividend investing, and it could be as simple as an S&P index fund or a Total Market fund. Hopefully, this series is inspiring people to invest in their future to attain financial freedom.

A historical recap of the Dividend Harvesting Portfolio's investment principles and historical performance

Investment Objectives

• Income generation
• Downside mitigation through diversification
• Capital appreciation

Below are the fundamental rules I have put in place for this Portfolio:

• Allocate $100 weekly to this Portfolio
• Only invest in dividend-producing investments
• No position can exceed 5% of the Portfolio
• No sector can exceed 20% of the Portfolio
• All dividends and distributions are to be reinvested

Below is a chart that extends from week 1 through the current week to illustrate the Dividend Harvesting Portfolio's Progression

• Blue line is my initial investment $100 in week 1, $1,000 in week 10, etc.
• Red line is the account value at the end of each week
• Yellow line is the annual dividend income the Dividend Harvesting Portfolio was projected to generate after that week's investments and dividends reinvested

The Dividend Harvesting Portfolio Dividend Section

Here's how much dividend income is generated per investment basket:

• Equities $253.20 (29.36%)
• ETFs $230.79 (26.76%)
• CEFs $162.28 (18.82%)
• REITs $157.48 (18.26%)
• BDCs $58.55 (6.79%)

Collecting dividends can serve many functions in a portfolio. Some investors utilize dividends to supplement their income and live off. I'm building a dividend portfolio for myself 30 years into the future. In 2022, I collected $490.76 in dividend income from 533 dividends. This has allowed the Dividend Harvesting portfolio to stay in the black while growing the snowball effect. In week 11 of 2023, I collected $6.84 in dividends, and in 2023 I generated $174.06 in dividend income. YTD I have generated 35.47% of my 2022 dividend income from 134 dividends which is 25.14% of the dividends generated throughout 2022.

These dividends allow me to gain additional equity in my investments while increasing my future cash flow in down markets. This style of investing isn't for everyone, but if you're looking to generate consistent cash flow while mitigating downside risk, this method has worked for me. I'm hoping to collect around $1,000 in dividends in 2023, which will be reinvested.

March is almost finished and I am interested to see what the YoY increase in dividend income generated is.

I found a tool that can track and visualize my monthly and weekly dividend income. I plan on showing this graph rather than the full year as it's a better visualization than what I had created. In week 107, my total annual dividend count remained 632, and there was dividend income being generated each week. This week there are limited dividends being generated, but in the last week, there are 29 dividends flowing into the account.

The goal of generating enough income from the dividends to purchase an additional share per year has been the never-ending project of this portfolio. There are now 19 positions generating an additional share per year. I am continuously working on getting more positions over the 100% threshold. I think I can finish 2023 with at least 25-30 positions generating a share per year from their dividends.

The Dividend Harvesting Portfolio Composition

Many of the readers have asked if I could break down the individual positions within these sectors. I created pie charts for each individual sector and have illustrated how much each position represents of that sector of the Dividend Harvesting portfolio. Since I only have one position in Food & Staple Retailing and Industrials, I did not make a chart for those. 3M (MMM) and Walgreens Boots Alliance (WBA) represent 100% of those sectors. The charts will follow the normal portfolio total I have constructed. Please keep the ideas coming, as I am happy to add as much detail to this series as I can.

In week 107, ETFs remained the largest section of the Dividend Harvesting Portfolio's composition. Individual equities make up 41.47% of the portfolio and generate 29.36% of the dividend income, while exchange-traded funds ("ETFs"), closed-end funds ("CEFs"), real estate investment trusts ("REITs"), business development companies ("BDCs"), and exchange-traded notes ("ETNs") represent 58.53% of the portfolio and generate 71.64% of the dividend income.

I have a 20% maximum sector weight, so when a singular sector gets close to that level, I make sure capital is allocated away from that area to balance things out. This is the first time I have exceeded 20% in a single sector of the portfolio. I will be allocating capital away from ETFs for a while to get this sector under 20%.

In my quest to get JEPI to generate an additional share per year through its dividends, it's become my largest position. Verizon (VZ) has fallen to the number 2 spot, and INTC is no longer on the list. I won't be adding to JEPI for a while, and I will try not to add to VZ.

Week 107 Additions

In week 107, I added to the following positions:

• JPMorgan Equity Premium Income ETF (JEPI)
• Medical Properties Trust (MPW)
• New York Community Bancorp (NYCB)

JPMorgan Equity Premium Income ETF

• I needed one more share of JEPI to generate an additional share per year from its dividend so I added to my position. I also felt it was a good time with the markets crashing on Monday due to the SVB news and banking uncertainty.

Medical Properties Trust

• MPW has been crushed, and the shorts are in control. Seeking Alpha is showing 18.79% short interest, and shares have crashed to $7.73, declining -61.77% over the past year. Shares currently yield 15.01%, and I decided to add 3 shares to dollar cost average in week 107.

New York Community Bancorp

• My purchase of NYCB was similar to MPW. NYCB declined under $6 due to the banking crisis so I added 4 shares to dollar cost average as yields exceeded 10%

I sold Intel and reallocated the capital

INTC was one of my first positions as I started adding it back in 2021 at $52.74 per share. I added shares in the $40s and $30s and paid as low as $26.66. With INTC cutting the dividend and having a sub 2% yield, I wanted to exit the position and said I would exit when shares climbed above $30. I exited for a -19.24% loss and sold off the position for $437.02.

After INTC reduced its dividend, my position was generating $7.27 in annual dividend income. I took the capital from selling the position and allocated it to the following positions:

• JPMorgan Equity Premium Income ETF (JEPI)
• InfraCap Equity Income Fund ETF (ICAP)
• Schwab U.S. Dividend Equity ETF (SCHD)
• Enbridge (ENB)
• Walgreens Boots Alliance (WBA)
• Starwood Property Trust (STWD)
• Kinder Morgan (KMI)
• $16.40 cash (fractional share sold after the close)

Below is a breakdown of how many shares I purchased of each position. My dividend income increased by $24.45 or 336.13% from $7.27 to $31.72, swapping INTC for these positions.

Week 108 Gameplan

ENB and KMI have declined, and I am probably going to pick up shares of those in week 108. I am not sure what else I am going to do.

Conclusion

The markets have been volatile, and I am pleased with how the Dividend Harvesting Portfolio is handling the fluctuations. Being down -5.33% or -$569.78 in this portfolio doesn't faze me at all, and eventually, the markets will turn around. I am looking at this period as a buying opportunity, and I am happy to deploy capital each week to positions I want to own. My annual dividend income is approaching $900, and sooner rather than later, this portfolio will be generating $100 per month in projected dividend income. Please start sending me suggestions for week 110, as I will be adding positions based on reader suggestions.

Steven Fiorillo