Dividend Harvesting Portfolio Week 164: $16,400 Allocated, $1,466.94 Projected Dividends

It feels like it’s one thing after another as instability in the Middle East continues, the probability of a rate cut in May continues to decrease, and two major companies, Netflix (NFLX) and Nvidia (NVDA), led the markets lower on Friday. The S&P 500 has fallen for six consecutive sessions and finished the week down -3.71%, while the Nasdaq declined by -5.89%. On Friday shares of NFLX fell -9.09% as -$55.52 was shed from its share value after disclosing that they will no longer report their subscriber numbers starting in Q1 of 2025. Shares of NVDA dropped by -$84.71 or -10% on Friday after Super Micro Computer (SCMI) tumbled by more than -20% as speculations regarding a slowdown in sales circulated the investment community. All eyes will be focused on big tech as 5 of the Magnificent 7 report over the next 2 weeks as investors hope that earnings beat all around, excluding Tesla (TSLA), will be enough to negate any hawkish remarks from Fed Chair Powell at the upcoming FOMC meeting on May 1^st. I think the market overreacted regarding NFLX as the focus should be on profitability, not whether or not NFLX will report subscriber numbers. The subscriber number becomes less relevant as long as the top and bottom line grows. I hope that if big tech comes in with strong earnings, the FOMC conference doesn’t overshadow them. I think a lot of news is baked into the market, from a potentially weak Q1 from TSLA to an FOMC meeting that results in rates remaining stagnant and the potential for a higher for longer environment through the summer based on the data. Regardless of what occurs, I believe the Dividend Harvesting Portfolio is positioned to navigate the market, and I will be adding each week to more positions I want to own.

Even though this was a bad week for the markets after the continuous drawdown, the Dividend Harvesting Portfolio actually snapped its 2 consecutive weeks of being in the red. I think that says a lot because the S&P fell by -3.71% while the Nasdaq declined by -5.89% for the week, yet the Dividend Harvesting Portfolio increased its profitability by $12.47. Over the past 164 weeks, I have allocated $16,400 to the Dividend Harvesting Portfolio, and this week the account balance climbed to $17,816.38. The portfolio is in the black by $1,416.38 as it’s up 8.64% on invested capital. The dividend income being generated kicked it up a notch this week as $26.37 was generated. In week 164, I replicated some of the buys from week 163, which I added to my positions in Realty Income (O) and Pfizer (PFE). I think both companies have good strategic long-term positions, and I was able to put the dollar cost average into weakness while getting them closer to generating an additional share from their dividends on an annualized basis. The combination of these purchases and reinvesting the dividend income that was generated increased my forward projected dividend income by $8.56 (0.59%) to $1,466.94. I made an update to the portfolio snapshot below as I needed more room for the weekly and monthly graphics, and feel it looks a lot better as items aren’t as bunched up. A lot of progress is being made, and I believe that $1,500 of projected dividend income is going to happen by the end of May. It’s going to be interesting to see where the Dividend Harvesting Portfolio ends up at the end of 2024 and what it looks like in several years from now, as the powers of compounding are only just beginning.

The overall performance of the Dividend Harvesting Portfolio

I was a bit surprised that the Dividend Harvesting Portfolio snapped its downtrend in a week where the markets took a violent move lower. That is a testament to diversification and exposure to different market segments. Some may say that I am over diversified with 95 positions, especially since I hold 16 CEFs and 19 ETFs, but the results are times like this, which is exactly why I have built a portfolio like this. I am not trying to beat the market, and mitigating downside risk is one of my immediate goals, along with generating ongoing dividend income. In this portfolio, I am not focused on capital appreciation as a primary objective, as it is a byproduct of making strategic investments. The Dividend Harvesting Portfolio generates $1,466.94 in dividend income, which is an 8.23% yield on account value and 8.95% on invested capital. I am able to generate significantly more yield than from risk-free assets, and when the Fed eventually pivots, I think many of the underlying positions in the Dividend Harvesting Portfolio will thrive. I am excited to see where things end up at the end of 2024, but for now, I am very pleased with how my mini-ETF is navigating the market.

The Dividend Harvesting Portfolio dividend section

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

• Equities $424.02 (28.91%)
• ETFs $336.07 (22.91%)
• REITs $279.60 (19.06%)
• CEFs $259.05 (17.66%)
• BDCs $158.43 (10.80%)
• Treasuries $9.76 (0.67%)

Collecting dividends can serve many functions in a portfolio. Some investors utilize dividends to supplement their income and live off of them. I’m building a dividend portfolio for myself 30 years into the future. In 2022, I collected $507.80 in dividend income from 533 dividends. In 2023, I collected $978.11 in dividend income from 660 dividends. After the first 16 weeks in 2024, I have collected $399.87 from 207 dividends. This is 40.97 of the total dividend income generated in 2023 from 31.36% of the dividends produced.

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. The Dividend Harvesting Portfolio finished strong in 2023, and I am looking to generate $1,800 of dividend income in 2024 while getting to the point where I never dip below $100 of monthly dividend income being generated.

Alright, we’re coming into the final stretch of April, and so far I have generated $83.44 of dividend income this month. There are almost 1 ½ weeks left in April, and I don’t think it’s crazy to believe that I will generate more than $100 of dividend income this month. Looking at a bunch of my purchases in 2024, I have added to many positions that generate a monthly dividend and believe that the Dividend Harvesting Portfolio is setting up to generate triple-digit income on a monthly basis going forward. I had just missed the mark in February and March, but it looks like we’re going to stay above the $100 level going forward. Eventually, I am hoping that this portfolio will generate $1,000 per month in dividend income, even though that’s pretty far down the road.

As much as I want to just make a large deposit into this account and move all of these positions into the green section of the chart below, I have to stay within the original framework of investing $100 per week into the Dividend Harvesting Portfolio. There is a lot of progress being made in the middle of the chart as 13 positions are generating between 30-80% of their share price in dividend income. Each time I start writing this article, I have an idea of what I would like to allocate the following week’s capital. However, that usually changes after looking at the chart below, and again after I do some additional research at the beginning of the week. Eventually, by the end of the year I do want to have another 10-15 positions generating at least 1 share from their dividends. Today, there are 33 positions that are generating at least 1 share from their dividend income, and after reinvesting those dividends, the additional shares are projected to add $105.63 in forward dividend income. As time progresses and more positions generate at least 1 share of their dividend income, the powers of compounding will be unleashed, and I think some of the readers will be surprised at how much the forward dividend income will grow.

The Dividend Harvesting Portfolio Composition

As I had anticipated, REITs are flirting with a 20% allocation again in the Dividend Harvesting Portfolio. After adding to Realty Income over the past several weeks, I am actually surprised that REITs don’t exceed 20%. While I want to get Realty Income and Pfizer to the point where they are generating at least 1 share annually from their dividend income, I will focus on some other areas over the next several weeks unless they continue to fall by a decent amount. I would really like to get some of the individual equities sectors to play a larger role in the portfolio, even though my largest positions are with Altria Group (MO) and Verizon (VZ).

Individual equities now represent 38.31% of the Dividend Harvesting portfolio while generating 28.91% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 61.69% of the portfolio and generate 71.09% of the forward income. I plan on adding to every asset class within the Dividend Harvesting Portfolio throughout 2024, but in the early stages, I will try to divert capital away from REITs in the short term.

Well, it happened, and Realty Income is now part of the top-10 holdings as it has knocked out the BlackRock Science and Technology Trust (BST). Altria Group is still above 4.5% of the portfolio but is now the only position above 4%. The portfolio is starting to really level out, and I am hoping that over the next several months, the top 10 holdings will be a bit more even. I am going to try to refrain from adding to these positions, but if something occurs during earnings season where I feel there is an opportunity, I will probably take it.

With BST being knocked out of the top-10 holdings, the underlying data has changed a bit. Realty Income is now the 9^th largest position and there is a possibility that it will remain in the top-10 for some time. I have allocated $5,161.44 to the top 10 positions, and they are in the black by $677.99 with an account balance of $5,839.43. I have collected $505.87 in dividend income, which is 9.8% of invested capital. The top 10 positions collectively represent 32.78% of the Dividend Harvesting Portfolio, while their forward dividend income is projected to generate 31.85% of the forward dividend income.

Week 164 Additions

In week 164 I added to my positions in:

• Realty Income (O)
• Pfizer (PFE)

Realty Income

• I added to Realty Income again because shares were approaching the $50 level
• I want to get Realty Income to the point where the dividend I am getting is paying for at least 1 share per year
• I think commercial real estate is selling off again due to the uncertainty of rate cuts but once the Fed pivots I am expecting a rally
• I will continue to add to Realty Income over the next several months and enjoy reinvesting the monthly dividend income

Pfizer

• This is interesting because I was just having a conversation with one of my buddies about Pfizer. His concern was the pipeline. What I said to him is that Pfizer is trading at 11.78 times 2024 earnings and 9.02 times 2026 earnings. They just acquired Seagen and I don’t see a scenario where Pfizer disappears.
• Pfizer just backstopped the dividend by providing its 13^th annualized increase and has now gone into its 34^th year of paying a dividend.
• I am planning on adding to my position over time, reinvesting the dividend, and waiting for my investment thesis to play out.
• Shares of Pfizer could go lower but I think they are bottoming out and this is an opportunity to add to the position.

Week 165 Gameplan

As the markets sold off quite a bit this week, I am looking to add to positions that have exposure to big tech. I am thinking about the Neos S&P 500 High Income ETF (SPYI) and the Neos Nasdaq 100 High Income ETF (QQQI) as they will generate significant income and follow the markets higher to a degree if the markets rally throughout earnings season.

Conclusion

Despite coming off one of the sharpest weekly declines the markets have experienced in a while, the Dividend Harvesting Portfolio held its own and ended up in the black rather than in the red. I am very happy that the level of diversification within the portfolio was able to mitigate downside risk to this degree. The Dividend Harvesting Portfolio is delivering on my goals of generating recurring income, mitigating risk, and delivering some appreciation. I am getting closer and closer to generating $1,500 of forward dividend income, and I expect that March will be the last month in which I generate less than $100 per month from the dividends generated. Eventually, when the Fed pivots I think that many of the positions within the Dividend Harvesting Portfolio will rally as I have been adding to many positions during periods of weakness. Please leave all of your comments below as I try to interact with everyone in the comment section.