CA - Dividend Harvesting Portfolio Week 103: $10300 Allocated $807.27 In Projected Dividends

Summary

• The Dividend Harvesting Portfolio is now generating $807.27 in annual dividends, yielding 7.68%.
• The Dividend Harvesting portfolio has a 74.76% record of finishing the week in the black since its inception, 77/103 weeks.
• In week 103, I added to the following positions, PFFA, MPW, NYCB, ENB, and ORCC.

It's hard to believe that 7 weeks have passed in 2023. The S&P 500 is up 6.67%, and the Nasdaq has climbed 13.48% YTD. While the S&P 500 retracted -0.52% over the previous week, the Dividend Harvesting Portfolio remained in the black, adding a 6th consecutive week to the positive column. Since its inception, the Dividend Harvesting Portfolio has a 74.76% of finishing each week in the black as the portfolio balance has been above its invested capital for 77 of the past 103 weeks. I am not interested in outperforming the market, and this portfolio has been created strictly to generate a continuous stream of income while mitigating downside risk. With 83 individual positions across individual equities, ETFs, CEFs, REITs, and BDCs, I have created an extremely diversified portfolio to deliver on my investment parameters for this article series.

After 103 weeks and $10,300 of capital allocated, the balance of the Dividend Harvesting Portfolio is $10,510.70, up $210.70 or 2.05% on invested capital. In week 103, I collected $12.01 in dividend income from 12 individual dividends. YTD the Dividend Harvesting Portfolio has generated $107.34 of dividend income which is 21.87% of the income generated in 2022. In week 103, I added 1 share to each of the following positions, Enbridge ( ENB ), New York Community Bank ( NYCB ), Medical Properties Trust ( MPW ), Owl Rock Capital Corporation ( ORCC ), and the Virtus InfraCap U.S. Preferred Stock ETF ( PFFA ). My projected dividend income increased by $10.95 (1.38%) to $807.27, which is a forward yield of 7.68%.

I changed a section Dividend Harvesting Portfolio Dividend Section. Please let me know in the comments if you like it.

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 am 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 am going to address a question that continues to surface. I am 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 & 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 is how much dividend income is generated per investment basket:

• Equities $241.27 (29.89%)
• ETFs $215.33 (26.67%)
• CEFs $151.35 (18.75%)
• REITs $145.95 (18.08%)
• BDCs $58.47 (7.24%)

Collecting dividends can serve many functions in a portfolio. Some investors utilize dividends to supplement their income and live off. I am 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 7 of 2023, I collected $12.01 in dividends, and in 2023 I generated $107.34 in dividend income. YTD I have generated 21.87% of my 2022 dividend income from 84 dividends which is 15.76% 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 am hoping to collect around $1,000 in dividends in 2023, which will be reinvested.

February is almost coming to a close, and I am excited to update the following chart. The YoY data is interesting as there is extreme growth in the monthly dividend income.

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 103, my total annual dividend count remained 632, and there is dividend income being generated each week. In February, 11 days had dividends being generated, and there are 45 individual dividends being produced for the month. The week of Feb 13th, which is week 103, there were two dividends produced, Omega Healthcare Investors ( OHI ), and National Retail Properties ( NNN ), which didn't hit my account yet. That is why the dividend income will look different from the tracker below and what I put for week 103's generated income.

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. As the market appreciated, 2 of my positions fell just under the 100% threshold of creating a new share annually through their dividends, and there are now 17 positions that are accomplishing this task. I am going to set a goal of getting 30 positions to generate at least 1 share per year through their dividends by the end of 2023.

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 1 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 102, ETFs remained the largest section of the Dividend Harvesting Portfolio's composition. Individual equities make up 42.94% of the portfolio and generate 29.89% 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 57.06% of the portfolio and generate 70.11% 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. In 2022, I will make an effort to even out these portfolio percentages. As more capital is deployed, the bottom half of the portfolio weighting will increase.

In week 103, Verizon ( VZ ) remained my largest position and the only position to exceed 4% of the Dividend Harvesting Portfolio.

Week 103 Additions

In week 102 I added to the following positions in the portfolio:

• Virtus InfraCap U.S. Preferred Stock ETF ( PFFA )
• New York Community Bank ( NYCB )
• Medical Properties Trust ( MPW )
• Owl Rock Capital Corporation ( ORCC )
• Enbridge ( ENB )

Virtus InfraCap U.S. Preferred Stock ETF

• I needed 1 additional share for PFFA to produce an additional share through its dividend on an annual basis. This was the main reason I added it again in week 103. I also feel PFFA is undervalued, and while I am going to hold off from adding for a bit, it will be on my radar for the future.

New York Community Bank

• I felt Q4 earnings were strong for NYCB, and I wrote a dedicated article on my bull case ( can be read here ) as I feel it's undervalued. I will continue to add with the remaining weekly capital when I can until shares exceed $11.

Medical Properties Trust

• We're coming into earnings, and I feel MPW is going to catch a bid. MPW just issued its quarterly dividend at full freight and provided some interesting news from its portfolio.

Owl Rock Capital Corporation

• ORCC is also headed into earnings, and I love the story around this company. Leadership is buying back shares and allocating additional capital toward the dividend when ORCC generates additional quarterly earnings. This is one of my favorite BDCs, and I will be adding more.

Enbridge

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