Dividend Harvesting Portfolio Week 174: $17,400 Allocated, $1,552.82 Projected Dividends

The first half of 2024 is in the books, and it’s been profitable for many investors. The S&P has appreciated by 14.48%, while the Nasdaq has climbed 18.13%. The real question is, can the market continue on this trajectory and make new highs. We’re heading into earnings season once again, and we’re going to see if technology and other sectors can continue capitalizing on the AI narrative. I think there are several factors that are bullish for the markets. A tremendous amount of capital is being allocated toward CapEx and companies are expanding their earnings potential. The Fed is also heading into a rate-cutting cycle, as CME Group is forecasting that there is a 10.3% chance we get a rate cut in July, and that there is a 64.1% chance rates have experienced a cut at the September meeting. All signs are looking positive for the market to continue the current rally, except for unemployment. Whenever unemployment increases by 1% a recession follows, and it normally increases by 1% into a recession. Over the past year, unemployment has increased by 0.5%, and while some believe that 4% unemployment is low, recessions have occurred off these levels. The Fed has a dual mandate, and the second half is maximum employment. I think the Fed will have to take rates lower to protect the economy from a recession at this point, as we need the business environment to be less restrictive. I don’t know if the markets will replicate the first half of 2024, but I see them heading higher in the 2^nd half of the year. No matter what happens, I will still be allocating capital to the Dividend Harvesting Portfolio.

Even though the S&P 500 finished the week lower, the Dividend Harvesting Portfolio had a good week as its profitability increased by $165.83. I have now allocated $17,400 to the Dividend Harvesting Portfolio, and its account value is $19,844.42, which is an ROI of $2,444.42 (14.05%). I ended up following through with my game plan from last week as I added to my position in Realty Income (O) and the Neos S&P 500(R) High Income ETF (SPYI). I think the market is going higher, and REITs will do well as the Fed starts cutting rates, so I wanted to add to these positions. The Dividend Harvesting Portfolio ended up generating $47.42 in dividend income this week, and when I combine that with the positions I added to, my forward projected annualized dividend income by $12.80 (0.83%) to $1,552.82. The first half of 2024 is in the books, and the dividend income being produced now exceeds $1,500. I have increased my forward dividend income on an annualized basis in 2024 by 18.3% or $240.21, and if I keep this pace up, I will finish the year with around $1,800 of forward dividend income being produced. I am excited to see how the year progresses as dividend income is being generated each week and reinvested to benefit from the powers of compounding. Hopefully, the markets will replicate what they did in the first half of 2024 throughout the remainder of the year.

The overall performance of the Dividend Harvesting Portfolio

It was another good week for the Dividend Harvesting Portfolio as it added $165.83 in profitability. At the close of week 167 the account value was $19,844.42 while generating $1,552.82 in forward dividend income from $17,400 of invested capital. There have been ups and downs, but the downs compared to how volatile the market was in those periods weren’t that extreme. I am building this portfolio with the objective of generating recurring dividend income and mitigating downside risk. Capital appreciation is a secondary objective. I am overly diversified throughout 95 positions because it helps navigate unpredictable market dynamics. The Dividend Harvesting Portfolio has operated through macroeconomic events, geopolitical tensions, and higher interest rates, and the results have been solid. I am happy with the results and look forward to seeing where things go in the future.

The Dividend Harvesting Portfolio dividend section

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

• Equities $444.47 (28.62%)
• ETFs $369.80 (23.81%)
• REITs $286.71 (18.46%)
• CEFs $272.43 (17.54%)
• BDCs $169.58 (10.92%)
• Treasuries $9.84 (0.63%)

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 2023, I collected $978.11 in dividend income from 660 dividends. After the first 26 weeks in 2024, I have collected $693.92 from 353 dividends. This is 70.78% of the total dividend income generated in 2023 from 53.48% of the dividends produced.

In week 26 I collected $47.42 in dividend income which brought my weekly average in 2024 to $26.57. This is a 57.10% increase YoY from the 2023 weekly dividend average of $16.92 that the Dividend Harvesting Portfolio generated. The first half of 2024 is in the books, and I have already generated 70.78% of the dividend income I generated for the entire 2023 calendar year. At this point, I should have 100% of the dividend income that I generated in 2023 already produced by the end of Q3, and I think there is a real possibility that I will end up generating $1,250 of dividend income in 2024. After the powers of compounding take effect, I think it’s entirely possible to exceed $2,000 of generated income in 2024 as I continue allocating capital each week.

I was getting worried for a moment as I entered the last week in June pretty far away from my goal of generating at least $100 of dividend income. After producing $47.42 in dividend income during week 26, my goal was accomplished, and I closed out June, having produced $112.11 of dividend income. This marks an entire quarter of generating at least $100 of monthly dividend income, and it’s safe to say that a new bar has been set. I think I will finish the year out working on getting each month to generate over $125 of income, then $150. It looks like the first month of each quarter always has the largest amount of income produced, so it will be interesting to see the amount of dividend income generated in July. When I look at the YoY growth in dividend income, it’s remarkable, and I am excited to see how the chart below transforms over the next several years.

There are still 34 positions generating at least 1 share annually from their dividends. The new shares are expected to add $117.99 in forward dividend income as they enter the portfolio. I am working on getting more positions to cross over into the green section of the table below, but it’s going to take some time to accomplish. I think there are a lot of opportunities within the portfolio for investments, and I am excited to see how things progress. I am hoping to have several positions cross over this summer, but it’s going to take some work. I have to be careful with REITs and ETFs as they are just under my 20% weighting for each sector, so I will probably add to some individual equities, and BDCs in the coming weeks.

The Dividend Harvesting Portfolio composition

Even though I added to SPYI and O, REITs and ETFs still represent less than 20% of the Dividend Harvesting Portfolio individually. While I have been very conscious about allocating capital to other areas of the portfolio, I felt there was an opportunity in O and SPYI. I am not thrilled that REITs and ETFs represent almost 40% of the portfolio, but I am not surprised, considering I would have gravitated to many of these positions anyway. It may take several years, but eventually, I would like these percentages to balance out a lot more. Over the next several weeks, I will try to add a bit more to individual equities and BDCs.

Individual equities now represent 38.79% of the Dividend Harvesting portfolio while generating 28.62% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 61.21% of the portfolio and generate 71.38% of the forward income. I am working on getting individual equities to represent more of the portfolio, and looking at the pie charts below, I really need to find another technology company to get bullish on, as Cisco Systems (CSCO) is now 67.4% of the technology position.

In week 174, Realty Income made it back to the top-10 list, and in a big way. After adding another share to my position, it jumped to the 7^th largest holding in the portfolio and knocked Pfizer (PFE) off of the list. Altria Group (MO) is starting to work its way back from almost reaching 5% of the portfolio. I am happy that only 1 position exceeds 4%, and over time I think Altria Group will continue to work its way down to 4% as I am trying to work on other positions. I have a 5% max weighting on individual positions, and I am willing to add to the larger holdings just as I did with Enbridge (ENB) the prior week, but I am focused on leveling out the portfolio a bit.

I haven’t finished the next table, which will list the 11^th – 20^th largest positions in the same way the table below shows all the information for the top-10 holdings. Hopefully, this week it will be finished. PFE was kicked off the top-10 list by O, and that changed the table below a bit. My allocation to the top-10 positions is $5,340.20, and they finished the week with a value of $6,282.62. This is an ROI of $942.42 (17.65%). There have been $618.77 of dividends generated and reinvested, which is 11.59% of the initial investment into these positions. I am now projecting that $490.65 of dividend income will be generated from the top 10 holdings, which have a forward yield of 9.19%. These positions represent 31.66% of the portfolio, while their forward dividend income is projected to generate 31.60% of the Dividend Harvesting Portfolio’s annualized income.

Week 174 Additions

In week 174, I added to my positions of Realty Income and the Neos S&P 500(R) High Income ETF.

Realty Income

• O has been one of the companies I gravitate to in the real estate sector. It’s synonymous with dividends, as they have declared 647 consecutive monthly dividends and recently provided investors with their 107^th consecutive quarterly increase.
• O has a dividend yield of 5.98% and has increased the dividend on an annual basis for the past 26 years.
• I believe that O will rebound as the Fed starts to cut rates and will provide an opportunity to generate a larger yield than risk-free assets and capital appreciation.

Neos S&P 500(R) High Income ETF

• SPYI has amassed more than $1.5 billion in assets under management (AUM) since it went public in 2022.
• I think the market is going higher and SPYI provides an ETF that allows investors to benefit from implementing a covered call strategy to generate income but also buys out of the money options to participate in some of the upside when markets appreciate.
• SPYI has paid $5.89 in its monthly distributions over the trailing twelve months (TTM) which is a 11.75% yield.
• I think SPYI will continue higher and generate significant amounts of income in the years to come

Week 175 Game Plan

In week 175, I am considering adding to my positions in Bristol-Myers Squibb (BMY), and the Blackstone Secured Lending Fund (BXSL).

Conclusion

I can’t believe 175 weeks have passed since I started this series. No matter what your style of investing is, consistency matters, and I hope this series reflects that. Investing is a marathon, not a sprint, and it doesn’t matter if you’re just buying an S&P 500 index fund or building an income-producing portfolio, consistently investing makes a huge difference. The amount of income that the Dividend Harvesting Portfolio produces has now passed $1,550 on an annualized basis, and it continues to grow each week. I have now completed my first quarter, where there was more than $100 of income produced each month. I am excited to see where things end up as I believe the Dividend Harvesting Portfolio will continue to grow the amount of income it produces while being in a position to capitalize on a rate cutting cycle when the Fed makes a move. Thanks for reading, and please leave a comment, as I try to interact with everyone in the comment section.