Dividend Harvesting Week 78 Update: $7,800 Allocated, $562.72 In Annual Dividends Yielding 7.18% Across 78 Positions

Adrian Vidal

The Fed strikes again as Jerome Powell crushed the rally during his speech on Friday. Just hours after J. Powell dropped the hammer, all of the major indices finished in the red as the Dow declined -1,008.38 (-3.03%), the S&P 500 declined -141.46 (-3.37%), and the Nasdaq declined by -497.56 (-3.94%). This pushed the S&P 500 to -15.4% YTD, and the Nasdaq back into a bear market as it has declined by -23.31% YTD once again. Nobody can predict where the market will close at the end of 2022, but it certainly seems like volatility is in our future. While some investors are freaking out, I see this as an extended opportunity to add to positions at lower price points. Eventually, the markets will rebound regardless if it takes 2 months or 2 years, and long-term investors who have the ability to continue buying during downturns should do well in the future. Even though the markets took a nosedive this week, the Dividend Harvesting Portfolio closed its 70th week in the black bringing its record to 89.74% (70/78). Sometimes the 78 positions in the title rubs people the wrong way. All I ask is that you actually read through the article if this is your first time clicking on this series. Extreme diversification and dividend reinvesting have allowed this portfolio to stay in the black for almost 90% of the weeks since inception. Throughout a bear market, the Dividend Harvesting Portfolio has proven that it can withstand negative market dynamics and periods of increased volatility.

After 78 weeks, I have allocated $7,800 ($100 per week) to the Dividend Harvesting Portfolio. Its value is starting to follow the markets down, but I am still in the black as the portfolio’s value is $7,838.77, up 0.5% on my invested capital. I am currently generating $562.72 in projected annual income from the portfolio’s holdings which is a 7.18% yield or a 7.21% yield on invested capital. There is dividend income generated every week throughout the year, and this week 5 positions paid dividends totaling $4.97 in weekly income. In 2022, the Dividend Harvesting portfolio has produced 320 individual dividends, totaling $271.02, which has been reinvested back into its positions. Over the past several weeks, I have been focused on getting additional positions to the point where they are generating more than 1 share annually through reinvesting their dividends. Week 78’s allocated capital went was distributed across Ares Capital (ARCC), Medical Properties Trust (MPW), Liberty All-Star Equity Fund (USA), and the CBRE Global Real Estate Income Fund (IGR). I took the opportunity to get ARCC and USA to the point where they generate more than 1 share annually through their dividends and lower my price per share in MPW. I was around even on IGR, and this is a fund I want more exposure to, so I added 3 shares to this position.

Steven Fiorillo

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

  1. Income generation
  2. Downside mitigation through diversification
  3. 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

Steven Fiorillo

The Dividend Harvesting Portfolio Dividend Section

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

  • Equities $175.97 (31.27%)
  • ETFs $124.44 (22.11%)
  • CEFs $112.18 (19.94%)
  • REITs $107.75 (19.15%)
  • BDC $36.92 (6.56%)
  • ETNs $5.46 (1%)

Steven Fiorillo

Steven Fiorillo

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. Since I am reinvesting every dividend, they serve multiple purposes today. In 2022 alone, I have collected $271.02 in dividend income from 320 dividends across 34 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.

Steven Fiorillo

This next chart illustrates my monthly YoY dividend income progression. Since I started this series in April of 2021, that is where the dividend income starts, illustrated by the blue bars. My dividend income has increased substantially as April’s income has grown by 886.2% YoY, March 585.52% YoY, June 476.52% YoY, and July’s by 254.25% YoY. I plan on continuing to plot out this chart at the end of every month, and at the end of March, I will show the annual YoY progression in dividend income generated.

Steven Fiorillo

The never-ending stream of dividend income keeps flowing into my account through weekly dividends. I haven’t added new positions since adding WBA and NNN to the Dividend Harvesting portfolio in week 73. There are 584 annual dividends being produced. Each week income comes rolling in, and the snowball effect amplifies little by little. Week 80 is rapidly approaching, and I will be adding new positions which could bring me past 600 annual dividends.

Steven Fiorillo

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. By adding to ARCC and USA, these have become the newest addition to positions generating at least 1 share annually through their dividend income. There are now 9 total positions generating at least 100% of their share value in dividends within the Dividend Harvesting portfolio.

Shares from Dividends Annually

0-9.9%

10-19.99%

20-29.99%

30-39.99%

40-49.99%

50-59.99%

60-69.99%

70-79.99%

80-89.99%

90-100%

Generating > 1 share

CSCO

FOF

PFFD

INTC

ORCC

IGR

MPW

T

OHI

ECC

QYLD

CCAP

MLPX

KMI

SLVO

PFFA

ALTY

THW

PTY

LGI

AQN

BTI

GSBD

VZ

GLDI

BRMK

BBDC

QYLG

UTF

RITM

MO

BST

RYLD

AMZA

BDJ

NUSI

XYLD

NYCB

BCAT

USA

KHC

ENB

C

EXG

STWD

BP

SPG

MFC

AGNC

JEPI

XOM

PDI

AMLP

DIVO

ARCC

UTG

CWEN

THQ

RQI

SO

XYLG

OKE

AY

WBA

NNN

STAG

MMM

O

VICI

ABBV

ORI

MAIN

ED

HPQ

GLW

BMY

KO

BAC

WBD

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 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.

Steven Fiorillo

In week 78, REITs remained as the largest sector of the Dividend Harvesting portfolio with a 17.41% portfolio weight, while ETFs maintained 2nd place, accounting for 16.07%. Individual equities make up 45.21% of the portfolio and generate 31.27% of the dividend income, while ETFs, CEFs, REITs, BDCs, and ETNs represent 54.79% of the portfolio and generate 68.% 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

REIT

$1,364.58

$7,838.77

17.41%

ETFs

$1,259.89

$7,838.77

16.07%

Closed End Funds

$1,181.95

$7,838.77

15.08%

Oil, Gas & Consumable Fuels

$619.99

$7,838.77

7.91%

Technology

$536.31

$7,838.77

6.84%

Financials

$532.70

$7,838.77

6.80%

Communication Services

$523.41

$7,838.77

6.68%

Consumer Staples

$524.09

$7,838.77

6.69%

BDC

$448.79

$7,838.77

5.73%

Utility

$309.82

$7,838.77

3.95%

Pharmaceuticals

$213.06

$7,838.77

2.72%

Industrials

$131.85

$7,838.77

1.68%

Independent Power & Renewable Electricity Producers

$116.43

$7,838.77

1.49%

Food & Staple Retailing

$36.00

$7,838.77

0.46%

ETN

$38.28

$7,838.77

0.49%

Cash

$0.00

$7,838.77

0.00%

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo.

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo

Steven Fiorillo

Week 78 Additions

In week 78 I added to my current positions of:

  • Ares Capital
  • Liberty All-Star Equity Fund
  • Medical Properties
  • CBRE Global Real Estate Income Fund

Ares Capital

  • Once again, I added to ARCC, and it is now generating over 1 share annually from its dividend income. I had an article published on why I was adding to ARCC (can be read here) as I see value in its shares.

Liberty All-Star Equity Fund

  • USA was a similar situation as ARCC, and I added enough shares in week 78 to get past the 100% mark of generating an additional share annually.

Medical Properties Trust

  • MPW is a REIT that specializes in hospitals. Its share price has been declining and I have been adding to the position. Its yield is now over 7%, and I think there is still an opportunity. Their FFO continues to increase YoY along with their revenue. I will still look to add to this position in the future.

CBRE Global Real Estate Income Fund

  • CBRE is the largest commercial real estate company in the world. IGR is a Closed-End fund backed by CBRE. I want more exposure to real estate, and this fund is a well-diversified fund across the global real estate market with 94 holdings. IGR is currently yielding 8.75%, and it has a solid dividend history with a substantial increase in the beginning of 2022.

Week 79 Game Plan

I am leaning towards adding to my position in Altria Group (MO) and Intel Corporation (INTC). MO just raised its quarterly dividend by 4% to $0.94. MO’s yield is at 7.85%, and the ex-dividend date is 9/14/22. I want to add to this position prior to its ex-dividend date. I wrote an article on INTC the other day outlining why I am still sticking with them. INTC is an investment I plan on holding for the next decade unless something drastically changes. INTC is yielding over 4%, and while it could keep going down, I see the light at the end of the tunnel, so I plan on continuing to add to this position.

Conclusion

The Fed struck back, and the markets declined several percentage points on Friday. While the Nasdaq was sent back into a bear market, and the S&P is back down over -15% YTD, the Dividend Harvesting Portfolio is still in the black. I am looking at declining prices as a long-term opportunity from a pricing and dividend reinvestment perspective. The Dividend Harvesting portfolio continues to deliver on my investment goals of generating income while mitigating downside risk. Thank you to everyone who continues to read this series. Week 80 is around the corner so please leave your suggestions in the comments below as week 80 is reader suggestion week, and I will be allocating that week’s capital to companies suggested by the readers.

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