ORCC - Dividend Harvesting Portfolio Week 92 Update: $9200 Allocated $690.36 In Projected Annual Dividends

Summary

• The Dividend Harvesting Portfolio is now generating $690.36 in annual dividends, yielding 7.48%.
• The Dividend Harvesting portfolio has a 77.17% record of finishing the week in the black since its inception, 71/92 weeks.
• In week 92, I added to my positions in XYLD, OHI, and BST.

After 13 consecutive weeks in the red, the Dividend Harvesting Portfolio has broken back into positive territory. The Dividend Harvesting Portfolio fell as much as -12.65% in week 83 and maintained a double-digit loss for 3 consecutive weeks, but it never deterred my investment thesis. Recently Broadmark Realty Capital ( BRMK ) cut its dividend by -50%, and I need to decide if I will exit this position during tax loss harvesting season. On the bright side, BRMK makes up roughly 0.53% of the overall portfolio, and this is a perfect example of why diversification is so important. My overall projected annual dividend income declined by -$5.13 due to the dividend cut, but from a week-over-week perspective, my dividend income grew due to allocating $100 per week to dividend investments and reinvesting all of the dividends that are generated.

The Dividend Harvesting Portfolio finished week 92, valued at $9,225.66, up $25.66 (0.28%). My projected annual dividend income grew to $690.36 despite BRMK's 50% dividend reduction. In week 92, 18 companies generated dividends, and $20.60 worth of income found its way into my account and was reinvested into those positions. In the month of November, 50 individual dividends were generated, and the Dividend Harvesting Portfolio set a new record, as $62.47 of dividend income was produced. With my $100 of allocated capital, I added to my positions in Omega Healthcare Investors ( OHI ), Global X S&P 500 Covered Call ETF ( XYLD ), and the BlackRock Science and Technology Trust ( BST ).

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 $211.19 (30.59%)
• ETFs $166.19 (24.51%)
• REITs $134.89 (19.54%)
• CEFs $131.84 (19.10%)
• BDCs $43.25 (6.27%)

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 have collected $437.81 in dividend income from 482 dividends across 48 weeks. This has allowed the Dividend Harvesting portfolio to stay in the black while growing the snowball effect.

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 between $450 and $500 in dividends in 2022, which will be reinvested, and finish the year generating >$700 in annual dividends.

November has come to an end and the Dividend Harvesting Portfolio generated $62.47 in dividend income throughout the month. This is a YoY increase of 168.80% as November 2022's income grew by $39.23. I am projecting that there will be 47 positions paying roughly $50.31 in dividend income throughout December to close out 2022.

I haven't added new positions since week 90, and the Dividend Harvesting Portfolio has 604 individual dividends flowing through its portfolio on a weekly basis.

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. There are now 13 total positions generating at least 100% of their share value in dividends within the Dividend Harvesting portfolio as OHI has crossed over the 100% threshold. This could fluctuate due to market volatility, but I am looking to have as many positions generating at least 1 share annually from their dividends as I can.

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 92, REITs remained the largest segment within the Dividend Harvesting Portfolio. Individual equities make up 44.36% of the portfolio and generate 30.59% 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 55.64% of the portfolio and generate 69.41% 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 92, INTC was still the largest allocation in the Dividend Harvesting Portfolio. INTC remained 4.25% of the portfolio.

Week 92 Additions

In week 92, I added to the following positions in the Dividend Harvesting Portfolio:

• Global X S&P 500 Covered Call ETF ( XYLD )
• BlackRock Science and Technology Trust ( BST )
• Omega Healthcare Investors ( OHI )

Global X S&P 500 Covered Call ETF

• XYLD is yielding over 10%, and I am trying to get it to generate more than 1 share per year from its dividends. I added this week and may add again next week to accomplish this goal. I believe that when the market rallies, XYLD will appreciate a bit as well.

BlackRock Science and Technology Trust

• BST is a similar situation as XYLD. As it's so close to generating 1 share annually through its dividends and it's in the red, I added another share and plan on adding again next week.

Omega Healthcare Investors

• I believe OHI is undervalued and wrote a dedicated article on the idea, which can be read here . OHI has crossed over the 100% threshold of generating a share annually, so I will hold off on adding to this position for a while.

Week 93 Gameplan

In week 93, I plan on adding to XYLD, and BST to get them over the finish line, in addition to Owl Rock Capital Corporation ( ORCC ) and New York Community Bank ( NYCB ).

Conclusion

The Dividend Harvesting Portfolio is back in the black, and the 13-week losing streak has been snapped. We may not be out of the woods yet, but this style of investing has proven it can mitigate downside risk and perform just fine throughout periods of uncertainty. I look forward to closing out 2022 and seeing how the progression takes shape in 2023. The Dividend Harvesting Portfolio is projected to generate $690.36 in annual dividend income from 604 individual dividends. There are roughly 50 dividends being produced in December, and I am hoping to finish the year strong.

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