ENB:CC - Dividend Harvesting Portfolio Week 144: $14400 Allocated $1274.81 In Projected Dividends

2023-12-07 09:00:00 ET

Summary

• The markets finished the week strong, with the S&P 500 up 1.04% and the Dow Jones up 0.66%.
• The Fed is projected to hold rates at the December meeting, but the probability of a rate cut in January 2024 has increased.
• The Dividend Harvesting Portfolio continues to perform well, generating triple-digit dividend income in November and exceeding $1,200 of forward dividend income.

The markets finished the week strong as the S&P 500 ended the week up 1.04% while the Nasdaq finished up 0.66%. While this wasn't a blowout week in the markets, everything seems like it's starting to come together for the Dividend Harvesting Portfolio. The CME Group Fed Watch Tool is now projecting that there is a 97.3% chance the Fed holds rates where they are at the December meeting, and the probability of a rate cut in January 2024 went from being nonexistent to 16.1%. Looking out to the end of 2024, the probability that rates are 4% and under has increased to over 40%, with a 1.3% chance the Fed Target Rate will be between 325 – 350 bps. I think this sets up well for the underlying positions within the Dividend Harvesting Portfolio as a lower rate environment should promote inflows into the capital markets from the trillions sitting as idle cash in money market accounts. As investors look to recreate the yield they have become accustomed to from risk-free assets, I think capital will find its way into dividend-focused ETFs and CEFs in addition to an array of equities from REITs to the Dividend Aristocrats.

After 144 weeks, I have allocated $14,400 to the Dividend Harvesting Portfolio. This was a strong week as the Dividend Harvesting Portfolio climbed further into positive territory, finishing up 4.99% ($718.35) on invested capital with a balance of $15,118.35. A new milestone was achieved in November, and based on when I added to specific positions, the Dividend Harvesting Portfolio generated its first month of triple-digit dividend income. In the final trading days in November, the Dividend Harvesting Portfolio generated $25.44 of dividend income, putting November's dividend income at $100.81. In week 144, a total of $26.86 in dividend income was produced, bringing the total amount of dividend income generated in 2023 to $895.39. In week 144, I added to my positions in the Cohen & Steers Infrastructure Fund ( UTF ) and the BlackRock Science and Technology Trust (BST). The combination of these purchases and the reinvested dividends increased my forward dividend income by $11.47 (0.91%) to $1,274.81, which is a forward yield of 8.41%. With 4 weeks remaining, I think the Dividend Harvesting Portfolio may finish 2023, having generated more than $1,000 in dividend income, having a forward annual dividend income projection that exceeds $1,300, and the possibility of producing $100 each month in dividend income going forward. It's going to be exciting to see where we end up at the end of 2023 and how 2024 unfolds.

The overall performance of the Dividend Harvesting Portfolio since inception

This was the 3 ^rd consecutive week that the Dividend Harvesting Portfolio remained in positive territory. I am not focused on beating the market in this portfolio, but it's certainly nice when things start to come together. The main focus of this portfolio is generating a continuous stream of dividend income while mitigating downside risk. I have diversified the holdings into 92 positions, which also include ETFs and CEFs. While some positions have been disappointing, there are others that have outperformed my expectations. My objectives are being accomplished and I will continue to build out this dividend producing machine as the years progress.

The Dividend Harvesting Portfolio dividend section

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

• Equities $365.41 (28.66%).
• ETFs $274.68 (21.55%).
• REITs $263.88 (20.70%).
• CEFs $220.23 (17.28%).
• BDCs $150.61 (11.81%)

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 48 of 2023, I collected $26.86 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 $895.39, which is 182.45% of my total 2022 dividend income. I have collected 602 dividends, 112.95% 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, and November was my 1 ^st month generating over $100 of dividend income, my next goal will be to generate 12 consecutive months of generating at least $100 in dividend income.

1. I just missed the goal of generating $100 of monthly dividend income in October by $0.38, and in November, I exceeded $100 by $0.81. A new milestone has been reached, and I'll take it. On a YoY basis, the amount of dividend income generated in November increased by 61.37% or by $38.34. Looking at the chart below, I see there has been a significant amount of YoY growth, as I expected. Going forward, I believe there will be similar growth on the horizon as I continue to build out the Dividend Harvesting Portfolio.

The Dividend Tracker is indicating that roughly $96.46 of dividend income will be generated in December. As income continues to flow into the account and I add to my current positions, I think there is a high percentage chance that $100 of dividend income will be generated in December again. This portfolio has generated weekly income, and eventually, the goal will shift from generating $100 per month to $100 per week of dividend income.

Well, this was an interesting week as many positions shifted around in the table below, which projects which positions are generating at least 1 share from their dividend income annually. SL Green Realty ( SLG ) had a huge week, and it's now fallen to generating 84.59% of its current share price from dividend income annually. There are many positions I plan on adding to, and this chart will eventually expand more toward the green, but the next several weeks could fluctuate a bit. There is now roughly $98.92 being generated from the future shares created by the ongoing dividend income. I am excited to see where this chart finishes at the end of 2023, and I will make a plan for 2024.

The Dividend Harvesting Portfolio Composition

REITs had a big week, and their weighting in the Dividend Harvesting Portfolio increased by 0.59% from last week. I know that I have said 20% was my cutoff, and I plan on sticking to that, but it could take a while for this to correct itself. I believe REITs are going to appreciate quite a bit in 2024, and it's going to take some time for me to allocate enough capital away from REITs for its portfolio weight to fall under 20%. While I am monitoring where the sectors are, I am still focused on growing my cash position little by little. The cash will remain idle in a money market account until I either make a larger purchase, such as adding Apple ( AAPL ) to the portfolio, or building the position to roughly 5 - 10% of the portfolio to keep as dry powder in case some outstanding opportunities present themselves.

Individual equities comprise 37.41% of the Dividend Harvesting portfolio while generating 28.66% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 62.59% of the portfolio and generate 71.34% of the forward income. I am not planning on putting any restrictions on this section regarding the equity ratios. Looking at the sectors, I am quite pleased at the level of diversification I have achieved, and over the next several years, I am going to work on getting a more even distribution for the portfolio weighting.

In week 144, Simon Property Group ( SPG ) knocked FS KKR Capital Corp ( FSK ) out of the top 10 holdings. REITs had a monster week, and SPG went from falling out of the top 10 to the number 9 spot. I think the top 5 will remain intact for some time, but I can see spots 6 – 10 changing a bit over the next several months.

Portfolio Statistics

I have allocated $4,558.91 to the top 10 holdings in the Dividend Harvesting Portfolio. They have generated $429.88 in dividend income since the inception of this series, which is 9.43% of their initial investment. The top 10 holdings are valued at $4,813.13, which is an increase of $254.22 on invested capital. The top 10 holdings are projected to produce $394.79 in forward dividend income, which is a collective yield of 8.66%.

Week 144 additions

In week 144, I added to my positions in:

• Cohen & Steers Infrastructure Fund ( UTF )
• BlackRock Science and Technology Trust ( BST )

Cohen & Steers Infrastructure Fund

• On November 21 ^st, I wrote a dedicated article on my bullish thesis for UTF ( can be read here )
• UTF has a long history of generating monthly income for its investors as it's produced $33.44 in distributed income , which is 167.2% of its initial price of $20.
• I am bullish on infrastructure companies such as utilities and pipelines as I believe a sizeable portion of the capital sitting on the sidelines will be reallocated toward high-yielding, income-producing assets when the Fed pivots. This should be bullish for utilities and pipelines, and I think we will see these sectors thrive in 2024, which will be good for UTF.
• I own several positions within UTF's holdings in the Dividend Harvesting Portfolio such as Enbridge ( ENB ) and Southern Company (SO). I am more than happy to add to UTF and reinvest the monthly distribution while I wait for these sectors to appreciate.

BlackRock Science and Technology Trust

• On November 22 ^nd I updated my thesis on BST ( can be read here ).
• Last week, my average price per share for BST was $38.51. By adding an additional share, I increased the amount of forward dividend income BST generated by $3 and lowered my average price to $38.12.
• BST is one of my favorite CEFs, and while I started buying shares when the market was high, by reinvesting the distributions, I am in the black on my overall investment.
• I think 2024 will be a good year for big tech and growth stocks as we could see a risk on environment in the 2 ^nd half of 2024.
• I think that as capital flows back into the market, some investors will look to growth companies to try and make up for the lost alpha from being in money markets rather than the Qs or the S&P.
• BST has a good combination of big tech and growth companies, and I plan on buying more and lowering my price per share further.

Week 145 gameplan

In week 145 I am planning on adding to my positions in the JPMorgan Nasdaq Equity Premium Income ETF ( JEPQ ) and the Amplify CWP Enhanced Dividend Income ETF (DIVO).

Conclusion

The market is pricing in a Fed pivot sooner than later, regardless of Jerome Powell's commentary. All eyes will be on the upcoming Fed meeting that takes place in less than 2 weeks, and while I expect them to hold rates where they are, I wouldn't be that surprised if the take rates higher 1 last time. I think the past several weeks is an example of what will occur when the Fed pivots, and I think a pivot will occur in the 1 ^st half of 2024, no matter what happens at the December Fed meeting. The Dividend Harvesting Portfolio continues to mitigate risk and just produced its first month of $100 in dividend income collected. Just as I did during the bear cycle, I will continue to allocate capital each week and build out the positions in this portfolio. When I look at the amount of dividend income that the Dividend Harvesting Portfolio is expected to generate on a forward basis from investing $100 per week for the past 144 weeks, I am quite pleased. I am excited to see what this looks like in several years as I shift from chasing $100 per month in dividend income to $100 per week from this portfolio. If you have any questions or suggestions, please leave them in the comment section as I try to interact with everyone throughout the week.

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