VZ - Dividend Harvesting Portfolio Week 148: $14800 Allocated $1312.61 In Projected Dividends

2024-01-04 09:00:00 ET

Summary

• The Dividend Harvesting Portfolio finished 2023 with an account balance of $15,931.25 and is projected to generate $1,312.61 of forward dividend income.
• The portfolio exceeded the amount of dividend income generated in 2022, with a total of $976.11 generated in 2023.
• The top 10 holdings of the portfolio make up 33.66% of the total portfolio and have generated 9.77% of the invested capital in dividends.

2023 has come to an end, and what a year it's been. Geopolitical tensions continued to increase, inflation continued to decline, yet the Fed increased rates and maintained a higher for longer stance, we endured a regional banking crisis where several regionals failed, the Fed became less hawkish at the end of the year, and the S&P 500 increased 24.2% while the Nasdaq climbed 43%. In the last trading week of the year, the S&P 500 increased by 0.32% while the Nasdaq rose 0.12%. At the end of 2022, the Dividend Harvesting Portfolio finished with an account balance of $9,218.52, with $735.25 of forward projected dividend income being generated ( week 96 can be read here ). Another $5,200 was allocated throughout 2023, and the Dividend Harvesting Portfolio finished the year with an account balance of $15,931.25 and is projected to generate $1,312.61 of forward dividend income. I am pleased with the final results, and I feel that many of the investments I made throughout 2022 and 2023 will work out well in 2024. It's going to be an exciting year, and I am looking forward to allocating $100 per week and documenting the process with the Dividend Harvesting Portfolio series on Seeking Alpha.

After 148 weeks, I have allocated $14,800 to the Dividend Harvesting Portfolio. I can't believe another year has passed, and at the end of week 148, the Dividend Harvesting Portfolio finished up 7.64% ($1,131.25) on invested capital with a balance of $15,931.25. In the last week of the year, $30.93 of dividend income was produced, bringing the total amount of dividend income generated in 2023 to $976.11. To close out the year, I added to my positions in Pfizer ( PFE ) and the PIMCO Dynamic Income Fund (PDI). The combination of these purchases and the dividends that were reinvested increased my forward projected dividend income by $11.24 (0.86%) to $1,312.61, which is a forward yield of 8.24%. This is going to be an interesting year as I will be working on closing the gap between where the portfolio currently sits and ending 2024 with an account balance of $20,000 and producing $2,000 of forward dividend income. I hope everyone had a healthy and happy new year and that 2024 will be a prosperous year for everyone.

The overall performance of the Dividend Harvesting Portfolio since inception

2023 has come to an end, and I am pleased with the results from the Dividend Harvesting Portfolio. I have been allocating $100 per week for 148 to document building out a diversified income-producing portfolio. My primary objectives have been to construct a portfolio that focuses on generating an ongoing stream of income while mitigating downside risk. My secondary objective is capital appreciation. Looking at the results in the graph below, the Dividend Harvesting Portfolio has become my own ETF, and its meeting all my objectives.

The Dividend Harvesting Portfolio started 2023 with an account balance of $9,218.52 and producing $735.25 of forward dividend income. Throughout the year, I allocated $5,200 in increments of $100 per week. The Dividend Harvesting Portfolio finished 2023 with an account balance of $15,931.25, of which $5,200 came from new capital being injected into the account and the underlying holdings appreciating by $1,512.73. I was able to add $577.36 of forward dividend income, increasing the amount of projected income the Dividend Harvesting Portfolio generates to $1,312.61. My goals for 2024 are to keep the momentum going and come as close to an account balance of $20,000 and generating $2,000 in forward dividend income as I can get.

The Dividend Harvesting Portfolio dividend section

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

• Equities $377.71 (28.78%)
• ETFs $292.15 (22.26%)
• REITs $260.87 (19.87%)
• CEFs $229.95 (17.52%)
• BDCs $151.93 (11.57%)

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 52 of 2023, I collected $30.93 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 $976.11, which is 198.90% of my total 2022 dividend income. I have collected 660 dividends, 123.83% 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. The Dividend Harvesting Portfolio finished strong in 2023, and I am looking to generate $1,500 of dividend income in 2024 while getting to the point where I never dip below $100 of monthly dividend income being generated.

December came to an end without hitting $100 of generated dividend income. I produced $92.38, and November remains the only month that $100 of dividend income was exceeded. When I look at the YoY increases on a monthly basis, I am excited to see how 2024 unfolds as there is a chance I get to the point where more than $125 of dividend income is generated per month in 2024.

The Dividend Tracker is indicating that January 2024 is going to be a big month. If these dividends hit my account the way that it looks, I will generate roughly $118.68 of dividend income throughout the month. I don't want to get ahead of myself, but this is a strong start to the new year. At this point, it's a matter of when, not if in regards to generating at least $100 of dividend income per month going forward. Hopefully, this occurs sooner than later.

There are still 29 positions generating at least 1 new share per year through reinvesting their dividends. These shares are projected to generate an additional $98.02 in forward dividend income. My goal for 2024 in this area is to move 10 – 15 positions into the green sector, as shown in the table below. I think this is going to look very different next year, and the powers of compounding will intensify considerably.

The Dividend Harvesting Portfolio Composition

REITs declined a bit but still finished the year above my 20% sector threshold. I have tried very hard not to add to REITs as the overall position has become a bit larger than I would have liked compared to the other positions. I still think there is a lot of room for REITs to run in 2024, and plan on allocating capital in other areas even though there are many positions I want to own more of. My cash position increased to $185.16 as I continue to save increase, there is a pullback or an overwhelming opportunity to take advantage of.

Individual equities now represent 37.40% of the Dividend Harvesting portfolio while generating 28.78% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 62.60% of the portfolio and generate 71.22% 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.

My top-10 positions continued to flatten out toward the end of 2023, and while they look similar, the positions have shifted a bit throughout the top-10 holdings. Altria Group ( MO ) is my largest holding as it battled with Verizon ( VZ ) throughout the year. I still think there are many good buys within my top-10 and wouldn't be surprised if we see some newcomers in the following months.

Portfolio Statistics: Top-10 Holdings

Altria Group closed out the year as my largest holding. I got curious and looked to see if it was my largest income producer, and it beat out the 2 ^nd largest producer by $0.81. I have allocated $4,825.05 toward my top-10 positions, and so far, they have generated 9.77% of my invested capital ($471.57) in dividends. The positions are collectively worth $5,362.10, which is an 11.13% ROI ($537.05). These positions have an 8.96% forward dividend yield on invested capital, as they are expected to generate $432.32 in forward dividend income. The top-10 positions make up 33.66% of the Dividend Harvesting Portfolio.

Week 148 additions

In week 148, I added to my positions in:

• Pfizer ( PFE )
• PIMCO Dynamic Income Fund ( PDI )

Pfizer

• On December 26 ^th, I wrote a dedicated article discussing my bull case for PFE ( can be read here )
• I think there is a chance I may be catching the bottom on PFE. This has been a stock that was decimated in 2023 as it started the year at $51.24 and ended the year at $28.79.
• Pfizer just increased its dividend for the 13 ^th consecutive year, and has a yield of around 6%.
• When I look at the future EPS estimates , there is significant growth on the horizon, and PFE is trading at 12.71x 2024 projected earnings
• I think PFE could be a turnaround story in 2024

PIMCO Dynamic Income Fund

• PDI was an easy addition as I think corporate debt will do well in 2024 as rates decline. If I am correct, then PDI's underlying assets should do well and push its NAV higher, which should correlate to a higher share price
• PDI has a 14.75% yield, and when the Fed starts to cut, I think we will see several PIMCO CEFs catch a bid.
• I will keep adding PDI and compounding the monthly distributions as I have more than enough time for my investment thesis about corporate debt and other fixed-income instruments to play out

Week 149 Gameplan

I have been eyeing Exxon Mobil ( XOM ) as I would like to own more of it. If we get a pullback, I will probably pull the trigger. I am also interested in increasing my exposure to preferred shares through the Virtus InfraCap U.S. Preferred Stock ETF (PFFA). We will see what occurs.

Conclusion

2023 is in the books, and I would classify it as a success for the Dividend Harvesting Portfolio. I am excited to see how close I can get the account to a $20,000 balance and generating $2,000 of forward dividend income by the end of 2024. I think there are a lot of positions within my holdings that will do well when the Fed pivots, making the continuous investments I made during 2022 and 2023 pay off in spades. Week 150 is coming up, so please leave all your comments and suggestions below. Hopefully, everyone enjoyed the holiday season, and I want to wish everyone a prosperous new year!

For further details see: