2023-11-16 09:00:00 ET
Summary
- The Dividend Harvesting Portfolio finished the week down -0.97% on invested capital with a balance of $13,963.69.
- The portfolio generated $20.73 of income in week 141, bringing the total dividend income for 2023 up to $833.54.
- The top 10 positions in the portfolio have generated $460.94 in dividends, with a total investment value of $4,925.64.
Last week was something else as the markets went parabolic after the Fed meeting, and rates on the 10-year declined. This week, Chair Powell spoke on a monetary policy discussion panel at the 24th Jacques Polak Annual Research Conference in Washington, DC ( can be watched here ), spooking the markets only to be followed by a sharp rebound in Friday's session. A lot of economic data is coming out this week as CPI hits the street on Tuesday, PPI, Retail Sales, MBA mortgage market index data, and several energy data points are released on Wednesday, with a slew of Fed member speeches throughout the week. It will be interesting to see what is reported, how the market responds, and what the sentiment from the individual Fed members is. We're still a month away from the next Fed meeting, and the chance of a 25 bps hike is roughly 9.1%, according to the CME Group Fed Watch Tool . No matter what occurs, I will continue adding to my positions and building out the Dividend Harvesting Portfolio.
After 141 weeks, I have allocated $14,100 to the Dividend Harvesting Portfolio no matter what was occurring on a macroeconomic or geopolitical level. There have been ups and downs, and at the close of week 141, the Dividend Harvesting Portfolio finished the week down -0.97% on invested capital with a balance of $13,963.69. This week, the Dividend Harvesting Portfolio generated $20.73 of income, bringing the amount of dividend income that this portfolio has generated in 2023 up to $833.54. I started to work on a new section showing statistics on individual positions, and by doing so, I felt there was a strong opportunity to add to my position in Verizon (VZ). I added 1 share to Verizon and 1 share to the JPMorgan Nasdaq Equity Premium Income ETF ( JEPQ ) in week 141. Between these purchases and the dividend income generated my forward annual projected dividend income by $11.08 (0.90%) to $1,241.89. 2023 is winding down, and I am not sure where the Dividend Harvesting Portfolio will finish for the year, but if we do get a Santa Clause rally, there is a good chance it finishes up a few percent and generate at least $1,300 in potential forward income.
The overall performance of the Dividend Harvesting Portfolio since inception
It's been a tug-of-war between finishing the week in negative or positive territory. While the Dividend Harvesting Portfolio has fluctuated, it has mitigated downside risk and stayed within a respective range to invested capital. I am not trying to beat the market, as I am building a highly diversified income-producing portfolio that can navigate macroeconomic and geopolitical tensions. This goal may not work for some investors, and that is quite ok. My long-term goal is to document how I am building an income-producing portfolio from the ground up that can augment my income in retirement. These are not my only investments, and I started this series because there was a misconception that you needed a large amount of seed capital to make dividend investing work. I started this in week 1 by investing $100, and I have added $100 each week since then. While this is one of those weeks where the balance has slightly swung to the downside, I have a portfolio that is worth $13,963.69 that is producing an estimated $1,241.89 in forward dividend income, which is a forward yield of 8.89%.
The Dividend Harvesting Portfolio dividend section
Here's how much dividend income is generated per investment basket:
- Equities $360.77 (29.05%)
- ETFs $273.14 (21.99%)
- REITs $257.42 (20.73%)
- CEFs $205.09 (16.51%)
- BDCs $145.48 (11.71%)
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 45 of 2023, I collected $20.73 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 $833.54, which is 169.85% of my total 2022 dividend income. I have collected 557 dividends, 104.50% 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 not sure when my next goal will be achieved, but I am expecting to see a string of $100 plus months in dividend income produced starting within the next 3-6 months. I am still looking for my first month of $100 dividend income produced, as I fell short by $0.38 in October. I am excited to see how all of this unfolds, and I am looking forward to 2024 for the Dividend Harvesting Portfolio.
It looks like this will be another strong week of dividend income produced as 15 positions are projected to generate dividends within the Dividend Harvesting Portfolio. Based on when I may have added positions, there is a chance I will generate over $90 of income this November. December is also looking interesting as I am projected to generate around $95 of dividend income. Depending on what I add throughout the rest of November, December could creep up to the $100 level.
After week 141, there are now 31 positions that are generating over 1 share annually from reinvesting their dividends. The bottom 3 companies in the green quadrant have flowed in and out of this realm, but I am planning on allocating more capital to them so they remain on this side of the chart. The new shares generated from dividends are projected to produce an extra $102.77 of forward dividend income. Eventually, more positions will join the green quadrant, and I am hoping that 1 or 2 more can enter prior to 2023 ending.
The Dividend Harvesting Portfolio Composition
REITs are almost back down below the 20% threshold as I allocated capital to different segments of the Dividend Harvesting Portfolio in week 141. I am slowly working on rounding this portfolio out, and while it is still skewed toward REITs and ETFs, I think it will look a bit different over the next several years. Individual equities comprise 38.08% of the Dividend Harvesting portfolio while generating 29.05% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 61.92% of the portfolio and generate 70.95% of the forward income.
Verizon is creeping up again, but that was to be expected as I added another share to the position. Overall, the top-10 positions is looking more rounded as only 3 positions exceed 4% and 7 positions exceed 3%. There is still significant room between my 5% cap and where Verizon is at 4.42% of the portfolio. Over time, I think the top-10 holdings will continue to flatten out, and there could be a time when none of the positions exceed 4%.
New Section: Position Statistics
Several of the readers have asked for the share counts of each position in the Dividend Harvesting Portfolio. I have been trying to figure out how I could incorporate this with the most information possible. As there are 92 individual positions within the portfolio, this is time-consuming to set up and maintain, so it will be a work in progress. I tried to put myself in the reader's shoes and thought about what information I would want to know if I was reading the article and not writing it. I don't want people wasting time trying to reverse engineer anything to get the data they are interested in. Below is a table that I constructed based on every share purchased and every dividend generated. I am starting with the top-10 holdings and may extend this into sector breakouts also. For now, I will provide the following information:
- How many shares I have purchased
- What was my initial investment into the position is
- What my price per share ((PPS)) based on the initial investment is
- How much money in dividends were generated and reinvested
- How many new shares were purchased through the dividends
- My total current shares
- My current investment value
- The P&L
- What the current dividend is
- What the forward dividend income is based on current shares
- What the forward yield is
Please let me know what you think, if this is helpful, and if there is other information you're interested in. I am happy to provide as much information as I can, and I don't want anyone driving themselves crazy trying to reverse engineer things, especially since you don't have the data that I am looking at.
I have allocated $4,819.14 to my top-10 positions, and they have generated $460.94 that have been reinvested. Today, I am up $106.50 as these investments are worth $4,925.64, and they are producing $418.13 collectively in annual dividend income, which is a forward yield of 8.68%. I may expand this further into sectors, and the format of the table could change. After playing with it a bit, this was how I felt the information would be viewed in the easiest manner. Please let me know what you think.
Week 141 additions
In week 141, I added to my positions in:
- Verizon
- JPMorgan Nasdaq Equity Premium Income ETF
Verizon
- I wrote an article after Verizon reported earnings, discussing why I was still bullish on them. The article can be read by clicking here .
- I wasn't planning on adding to Verizon this week, but when I built the top-10 statistics, I noticed that I would be able to bring down my PPS on Verizon by a significant amount by adding another share.
- Verizon has a large debt profile, but after reducing its expenses, they are expected to generate roughly $18 billion in free cash flow ((FCF)) in 2023.
- After going through the debt profile again, Verizon should have the ability to continue increasing the dividend and managing its debt obligations.
- With the yield still exceeding 7%, I was happy to add another share of Verizon
JPMorgan Nasdaq Equity Premium Income ETF
- Adding another share to the JPMorgan Nasdaq Equity Premium Income ETF was an easy decision for me. I think that while the markets could be choppy for the next 3-6 months, big tech has defied macroeconomic hardships and geopolitical tensions and showed they can deliver strong earnings no matter what is thrown at them. I think the Fed is going to be forced to pivot as a higher for longer rate environment could throw the economy into a recession and destroy the financial industry. I don't think this is the Fed's endgame, and while they have a dual mandate, they will lean toward maximum employment rather than bringing inflation to 2% at the expense of Americans.
- If I am correct, then I think it will be a risk-on environment, and the Nasdaq will have another strong year in 2024. Even if the Fed goes 25 bps higher in December, we're closer to the end of their tightening cycle than the beginning, and with a Presidential race gearing up, there will be overwhelming pressure to reduce rates to stimulate the economy.
Week 142 Gameplan
In week 142, I am leaning toward adding to my positions in FS KKR Capital Corp (FSK), and the PIMCO Corporate & Income Opportunity Fund (PTY).
Conclusion
I'm rapidly approaching $1,250 in forward projected dividend income, and having $100 of dividend income generated every month is around the corner. We have CPI, and a lot of important economic data being delivered this week, so it will be interesting to see what is reported, what the Fed commentary is, and how the markets react. No matter what occurs, I will continue building out this portfolio and watch the dividend income grow. Looking at the chart below, the snowball effect is starting to take form, and I am excited to see where this goes over the next several years. Please let me know what you think of the new section, and leave all your comments and suggestions below. I try to interact with everyone in the comment section.
For further details see:
Dividend Harvesting Portfolio Week 141: $14,100 Allocated, $1,241.89 In Projected Dividends