Summary
- The Dividend Harvesting Portfolio is now generating $774.90 in annual dividends, yielding 7.58%.
- The Dividend Harvesting portfolio has a 74% record of finishing the week in the black since its inception, 74/100 weeks.
- In week 100, I added JEPQ and BNS.
The market had a good week as the S&P 500 climbed 2.39%, and the Nasdaq gained 3.95%. With earnings season showing signs of life, the Nasdaq is trying to set a different tone as it’s appreciated by 11.89% YTD. We have a long way to go, but as the rest of big tech reports earnings the week of 1/30, there is a chance the rally continues, and the bears will go back into hibernation. The Dividend Harvesting Portfolio has now finished in the black for 3 consecutive weeks, and things are looking up. I can’t believe it’s been 100 weeks since I started this series and that I have allocated $10,000 to this portfolio by investing $100 per week. It’s never too late, and it’s never too early to start investing. I am writing this series to show everyone that it doesn’t matter where you start if you get started and continue to invest. It doesn’t matter if you pick an S&P 500 fund or individual equities if you define your risk tolerance and conduct your due diligence. Anyone can create an investment portfolio over time, and you don’t need a large amount of capital to make your money work for you.
After 100 weeks of allocating $100 per week to the Dividend Harvesting Portfolio, the current account balance is $10,255.98. Over the past 100 weeks, we have seen bull markets, bear markets, inflation rise to multi-decade highs, an ongoing war overseas, supply chain issues, and interest rates rise at an unprecedented pace. Through it all, the Dividend Harvesting Portfolio navigated the markets well and is now up 2.56%. In week 100, I collected $8.22 in dividend income from 6 dividends, bringing my projected annual dividend income to $774.90. In 2023 the Dividend Harvesting Portfolio generated $55.66 in dividend income, which is 11.34% of the dividend income generated in 2022. Every 10 th week I add new positions from suggestions left in the comment section throughout this series. In week 100, I added The Bank of Nova Scotia ( BNS ) and the JPMorgan Nasdaq Equity Premium Income ETF ( JEPQ ) to the Dividend Harvesting Portfolio.
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 $231.45 (29.87%)
- ETFs $200.27 (25.85%)
- CEFs $148.73 (19.19%)
- REITs $144.45 (18.64%)
- BDCs $49.99 (6.45%)
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 4 of 2023, I collected $8.22 in dividends, and in 2023 I generated $55.66 in dividend income. YTD I have generated 11.34% of my 2022 dividend income from 42 dividends which is 7.88% 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.
In December, I generated $63.44 in dividend income, a YoY increase of 124.49% or $35.18. It's going to be interesting to see how this chart progresses throughout 2023 and what the YoY growth rates will be.
In week 100 I added JEPQ and BNS to the Dividend Harvesting Portfolio which added 16 individual dividends, bringing my total annual dividend count to 620. There is dividend income coming in every week, and at some point I may start tracking this by the day. Let me know if this is something that you would find interesting by leaving a comment in the comment section.
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 16 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 100, ETFs remained the largest section of the Dividend Harvesting Portfolio's composition. Individual equities make up 42.99% of the portfolio and generate 29.87% 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 57.01% of the portfolio and generate 70.13% 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.
Industry | Investment | Portfolio Total | % of Portfolio |
ETFs | $1,918.16 | $10,255.98 | 18.70% |
REIT | $1,845.99 | $10,255.98 | 18.00% |
Closed End Funds | $1,501.27 | $10,255.98 | 14.64% |
Oil, Gas & Consumable Fuels | $956.09 | $10,255.98 | 9.32% |
Financials | $693.84 | $10,255.98 | 6.77% |
Technology | $650.98 | $10,255.98 | 6.35% |
Communication Services | $660.41 | $10,255.98 | 6.44% |
Consumer Staples | $565.60 | $10,255.98 | 5.51% |
BDC | $566.74 | $10,255.98 | 5.53% |
Utility | $283.19 | $10,255.98 | 2.76% |
Pharmaceuticals | $226.54 | $10,255.98 | 2.21% |
Industrials | $120.44 | $10,255.98 | 1.17% |
Food & Staple Retailing | $150.50 | $10,255.98 | 1.47% |
Independent Power & Renewable Electricity Producers | $101.75 | $10,255.98 | 0.99% |
Cash | $5.95 | $10,255.98 | 0.06% |
In week 100, Intel Corporation ( INTC ) remained the in top spot followed by Verizon ( VZ ) as the largest position. INTC declined to 4.09% of the portfolio and VZ fell under 4%. The Dividend Harvesting Portfolio is starting to flatten out among its largest holdings.
Week 100 Additions
In week 100 I added the following positions to the portfolio
The Bank of Nova Scotia
- I recently wrote an article outlining my investment thesis which can be read here . BNS has been recommended several times and has been on the watch list for far too long. BNS has a dividend that can be traced back to 1933 and when I added it the dividend yield exceeded 6%. I believe that BNS is attractively valued and fits well in this portfolio.
JPMorgan Nasdaq Equity Premium Income ETF
- I have been a fan of JEPI for income and many readers recommended that I research JEPQ. I also wrote an article on JEPQ which can be read here after I conducted my due diligence. I happen to like JEPQ’s investment profile, and feel that it was a good time to make this an addition, especially if big tech delivers on earnings.
Week 101 Gameplan
I have had several thoughts on week 101. I want to add the InfraCap Equity Income Fund ETF ( ICAP ) as I just wrote an article on ICAP and really like this fund. I also want to add another share of Enbridge ( ENB ) and Verizon ( VZ ). We will see what happens. Eventually, I want to dollar cost average into 3M ( MMM ), which could occur in week 102 or 103.
Conclusion
Thank you for all the great suggestions for the Dividend Harvesting Portfolio. I have a running watch list from the suggestions, and in week 100, JEPQ and BNS made it into the Dividend Harvesting Portfolio. This portfolio has come a long way, and I have officially allocated $10,000 to this project. Anyone can build a portfolio from scratch; you just need to get started and be consistent. The Dividend Harvesting Portfolio is generating $774.90 in projected annual dividend income, and by the time 2023 is over, it will be close to generating $1,200 annually. I can’t wait to see what the next 100 brings, as this series is just getting started.
For further details see:
Dividend Harvesting Portfolio Week 100 Update: $10k Allocated, $774.90 In Dividends