PTY - Dividend Harvesting Portfolio Week 142: $14200 Allocated $1252.06 In Projected Dividends

2023-11-23 09:00:00 ET

Summary

• The markets responded positively to CPI data, with the S&P 500 and Dow Jones both finishing up.
• The Dividend Harvesting Portfolio saw a rebound and finished the week up 1.53%.
• The dividend income generated in 2023 has exceeded that of 2022, with a projected forward dividend income of $1,300 for 2024.

The markets responded well to the CPI data this week as the S&P 500 closed up 2.65% and the Nasdaq finished up 2.93%. CPI and Core CPI both came in under the consensus estimates and CME Group changed their forecasts again for the December Fed meeting. The CME Group Fed Watch Tool is now showing there is a 100% chance of a continued pause in December and January, then the Fed could pivot as early as the March meeting. At this point, all eyes will be glued to the Fed Press Conference on Wednesday, December 13th, at 2:30 PM. I do believe the Fed is done hiking as there is little reason to continue, especially with carrying and refinancing costs on debt at extremely high levels. As unemployment and bankruptcies creep up, there is more of a chance we see a recession before the Presidential election, which could cause the Fed to significantly cut rates. No matter what occurs, I will continue allocating capital on a weekly basis. I think that after the Fed pivots and several rate cuts occur, many of the positions within the Dividend Harvesting Portfolio will see better days, and all the buying into weakness will pay off in spades.

After 142 weeks, I have allocated $14,200 to the Dividend Harvesting Portfolio. Just like that, the market rebounded on welcomed CPI data and the possibility that the Fed is done hiking, and the Dividend Harvesting Portfolio swung back into the black. The Dividend Harvesting Portfolio finished week 142, up 1.53% ($217.49) on invested capital with a balance of $14,417.49. This week, $30.97 of dividend income was generated, bringing the amount of income this portfolio produced in 2023 up to $864.51. In week 142, I added to my positions in Altria Group, Inc. (MO), and the PIMCO Corporate and Income Opportunity Fund (PTY). Between these purchases and reinvesting the dividends generated, my forward dividend income increased by $10.17 (0.82%) to $1,252.06, which is a forward yield of 8.68%. There are another 6 weeks remaining in 2023, and there is a chance that when the year ends, I will have generated close to $1,000 of dividend income, and my forward projected dividend income to start off 2024 will exceed $1,300.

The overall performance of the Dividend Harvesting Portfolio since inception

The tug of war continues as the Dividend Harvesting Portfolio finished in the black once again. Over the past 142 weeks, I have built an extremely diversified portfolio consisting of 92 positions. My goal is to create an ongoing stream of dividend income while mitigating risk to the downside. I am pleased with how the portfolio has performed compared to invested capital, especially since we have tackled several macroeconomic difficulties and unfortunate geopolitical tensions. I started week 1 by investing $100 and then $100 each week going forward to prove that if you stick to a plan, you can build out an income-producing portfolio, and you don't need to start with a large amount of seed capital to make dividend investing work for you.

The Dividend Harvesting Portfolio dividend section

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

• Equities $364.97 (29.15%).
• ETFs $273.39 (21.84%).
• REITs $257.42 (20.56%).
• CEFs $210.79 (16.84%).
• BDCs $145.49 (11.62%).

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 week 46 of 2023, I collected $30.97 in dividends, and in 2023, I exceeded the amount of income generated from dividends compared to 2022. In 2022, I generated $490.76 from dividend income, and in 2023, I generated $864.51, which is 176.16% of my total 2022 dividend income. I have collected 572 dividends, 107.32% of the total dividends generated in 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. Now that I have exceeded $1,200 of forward dividend income, I am working toward my next goal of generating 12 consecutive months of $100 in dividend income.

Looking at the amount of dividend income generated on a YoY basis per month is very interesting to me. I am looking forward for 2023 to finish, so I have my 2nd full year of dividend data. Over the first several months in 2024, I think we're going to see a big jump in dividend income YoY, and I will finally start producing $100 months of generated dividends.

The upcoming week is going to be a bit light on dividends, considering it's a short week due to Thanksgiving. There are 5 positions on tap that will be generating dividend income, and the following week it looks like 23 positions will generate their dividends to finish out the month. I am on track to generate roughly $95 of dividend income in November, and I am interested to see how the month ends.

SL Green Realty Corp. (SLG) and Kinder Morgan, Inc. (KMI) keep moving in and out of the green quadrant. Some weeks they are producing an additional share from their dividend income, and some weeks they aren't. I already have a plan for next week, but very soon, I am going to add the weekly capital to those positions so they stay in the green portion of the table. There are currently 29 positions generating at least 1 additional share from reinvesting their dividend income on an annual basis. There is roughly $97.44 of new forward income being generated on an annual basis from these shares throughout the year. I am thinking about some goals for next year, and I am trying to figure out what is realistic. I think I can get at least another 10-20 positions to generate an additional share annually, but I always revert back to my favorites.

The Dividend Harvesting Portfolio Composition

REITs had a good week, like many other positions in the Dividend Harvesting Portfolio. REITs continue to exceed my 20% threshold for individual sector portfolio weighting, but they are slowly coming down below the threshold. I am working on getting more evenly distributed, and while it will take several years, I think this portfolio will look a bit different as the years progress. Individual equities comprise 37.93% of the Dividend Harvesting portfolio while generating 29.15% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 62.07% of the portfolio and generate 70.85% of the forward income. I have slowly been building a cash position, and while it's tempting to deploy the remaining capital, I am considering saving $5 - $10 per week to build a just-in-case fund. We will see what occurs.

We're starting to see a steeper drop off in the top-10 holdings within the Dividend Harvesting Portfolio. Eventually, I would like to see all positions under 4% even though I have a 5% max weighting rule in effect. I am not surprised at how this list looks as I continue to add to Altria Group, Enbridge Inc. (ENB), and Verizon Communications Inc. (VZ). There is still a lot of value within the portfolio, and I have a feeling positions 8 - 10 could change as I allocate more capital away from the largest holdings.

Portfolio Statistics

It looks like the majority of readers like the new section and the table I constructed below. I will continue to keep this updated and figure out if it's feasible for me to add additional tables by sector. It's a significant amount of work to build and maintain this, so it will be a work in progress. After double-checking everything, I did make a mistake last week. I put 17 shares purchased of Verizon rather than 16 shares. Everything is updated below to represent the correct statistics from the top-10 holdings in the Dividend Harvesting Portfolio. So far, I have allocated $4,184.80 to the Top 10 positions, and I am up $203.12 on these investments. The forward projected dividend income from these positions is $359.19, which is a forward yield of 8.58%. If you have any suggestions for additional data, please let me know.

Week 142 additions

In week 142 I added to my positions in:

• Altria Group, Inc. ((MO)).
• PIMCO Corporate and Income Opportunity Fund ((PTY)).

Altria Group, Inc.

• I recently wrote an article about my investment thesis on Altria Group ( can be read here ).
• When I looked at my top-10 holdings, I saw that there was an opportunity to reduce my price per share from $46.07 to $45.70 by adding an additional share of Altria Group. I would ultimately like to get price per share under $45 before accounting for the dividend income.
• I think that Altria Group is significantly undervalued as the P/E is lower than the dividend yield. Altria took a hit after they revised their 2023 earnings, and shares slid under $40 briefly.
• Altria is projected to grow its dividend at a mid-single-digit rate through 2028. With shares having a 9.6% yield already, I am happy to add to my position, bring down my price per share, and increase my forward dividend income.

PIMCO Corporate and Income Opportunity Fund

• I wrote an article about the PIMCO Corporate & Income Opportunity Fund on 11/7/23 ( can be read here )
• I think there is an opportunity in the fixed-income markets as the Fed is at the end of its tightening cycle. The CME Group is projecting that rate hikes are finished, a pivot could come as soon as March, and rates will most likely end up somewhere in the 4's at the end of 2024.
• As the Fed decreases rates, I think fixed income will appreciate as debt will be issued with lower coupons. This should make the investments that PIMCO was making over the past year appreciate in value and closed-end funds such as PTY to appreciate.
• I will sit back and collect my monthly distributions from PTY as the scenario plays out.

Week 143 gameplan

In week 143, I plan on adding to FS KKR Capital Corp (FSK) and Medical Properties Trust, Inc. (MPW).

Conclusion

The Dividend Harvesting Portfolio has been an income-producing machine as dividends continue to be generated weekly. I am happy with its progression as I am approaching a significant milestone of generating $100 per month of dividend income. Down the road, this milestone will turn into $100 of weekly dividend income. No matter what occurs with the Fed I will continue allocating capital each week toward positions within the Dividend Harvesting Portfolio. Once a Fed pivot occurs, I think many positions within this portfolio will catch a bid as income-producing assets will come back into favor. I think 2024 is setting up well for the investments I have made. Please leave your comments and suggestions below, as I look forward to interacting with everyone in the comment section.

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