Dividend Harvesting Portfolio Week 157: $15,700 Allocated, $1,389.49 In Projected Dividends

Summary

• The markets had a good week, with the S&P 500 increasing by 0.84% and the Dow Jones jumping 1.59%.
• The Dividend Harvesting Portfolio had another record week, with a balance of $17,078.29 and a profit of 8.78% on invested capital.
• The portfolio is focused on generating recurring dividend income while mitigating downside risk and aims to reach $1,500 of monthly dividend income.

The markets had another good week as the S&P 500 increased by 0.84% and the Nasdaq jumped 1.59%. We're less than 2 weeks away from the next Fed meeting, and there is a 96% chance that rates will stay where they are. I am looking forward to listening to Chair Powell's speech and seeing if anything changes in his delivery. The economy is hot, and I think his comments will be critical to the current rally. Many commentators have been incorrect on timing the Fed's actions, as they have stayed in a higher for longer rate environment. Corporate earnings are strong, and the economy has proven that it's been able to withstand the current rate environment, but it's clear that rates need to come down. Rent inflation is still over 6%, and the only way to get this line item under control, in my opinion, is to decrease the cost of ownership, and that will only occur through rate cuts. We need to see mortgage rates start to subside so the monthly ownership payments decrease. When that occurs, the carrying costs will decline, and part of the spread can be passed on to tenants. I think we will get our first rate cut by the July meeting, and I think May or June will be when the Fed pivots. The last thing anyone wants is a recession or unemployment to increase, and cutting rates will decrease the carrying cost of debt and make it more feasible for businesses to expand as the cost of capital declines.

Over the past 157 weeks, I have allocated $15,700 to the Dividend Harvesting Portfolio. This account just produced another record week, as the balance ended at $17,078.29. The Dividend Harvesting Portfolio is in the black by $1,378.29, which is a profit of 8.78% on invested capital. In week 9 of 2024, the Dividend Harvesting Portfolio generated $45.03 of dividend income, which brought February's total dividend income generated to $96.96. I came up just short on the $100 of income produced for the 2^nd consecutive month, but I am confident this is the last month of double-digit income that will be produced. In week 157, I decided to add to my position in the Cohen & Steers Infrastructure Fund (UTF) again, and Pfizer (PFE). The combination of these purchases and reinvesting the weekly dividend income increased the Dividend Harvesting Portfolio's forward projected income by $9.81 (0.71%) to $1,389.49. I am 1 or 2 weeks away from breaking through the $1,400 level for forward projected dividend income, and as the weeks progress, $1,500 should be reached before the summer. This style of investing isn't for everyone, as I am specifically allocating capital to generate income, rather than concentrating on total return. If I continue with this account for another 20 years or so, it should generate a significant amount of monthly income, which I will enjoy when I retire.

The overall performance of the Dividend Harvesting Portfolio

The Dividend Harvesting Portfolio has been through its fair share of ups and downs, and currently, it's experiencing an uptrend. It's amazing that there are still comments about underperforming the market here and there. These are not my only investments, and this series is focused around building an income-producing portfolio from the ground up on a fixed budget of $100 per week. My investment goals for this account are to generate recurring dividend income while mitigating downside risk. Capital appreciation is a secondary goal, but I am also fine if the account stays within a range on invested capital. The level of diversification I have created has allowed this account to endure geopolitical conflicts, recessions, inflation, and a rising rate environment while never retracing by more than -15% and generating weekly dividend income. I will continue building this portfolio, and over the next several years, I won't be surprised if I start writing covered calls on positions that reach 100 shares as I do in my other accounts.

The Dividend Harvesting Portfolio dividend section

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

• Equities $398.92 (28.71%)
• ETFs $312.29 (22.48%)
• REITs $270.23 (19.45%)
• CEFs $243.60 (17.53%)
• BDCs $154.68 (11.13%)
• Treasuries $9.76 (0.70%)

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 8 weeks in 2024, I have collected $242.09 from 122 dividends. This is 24.8% of the total dividend income generated in 2023 from 18.48% of the dividends produced.

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. The Dividend Harvesting Portfolio finished strong in 2023, and I am looking to generate $1,500 of dividend income in 2024 while getting to the point where I never dip below $100 of monthly dividend income being generated.

Well, February is in the books, and I came up short regarding dividend income. The Dividend Harvesting Portfolio generated $96.96 in monthly dividend income, which is a 68.39% ($39.38) increase YoY. I was really hoping that the last month of double-digit dividend income would have occurred in 2023, but that's not how things unfolded. Looking at the chart below, there is tremendous growth occurring, which is to be expected as I am continuously allocating capital toward income-producing assets. I think that February will mark the last month that the Dividend Harvesting Portfolio doesn't exceed $100 in dividend income produced. I am looking forward to seeing how the rest of the year unfolds and if $150 of monthly income is generated toward the end of the year.

There are 30 positions generating at least 1 share per year from reinvesting their dividends. The new shares generated are expected to add $101.08 to my forward dividend income. Looking at the chart, there is a lot of work to do, but over the next several months, I think several companies will join the green section in the table below. My long-term goal is to have every position generate at least 1 share on an annual basis from their dividends. The powers of compounding are just starting to take place, and I am excited to see how they unfold in the years to come.

The Dividend Harvesting Portfolio Composition

REITs just exceeded 20% of the Dividend Harvesting Portfolio again without adding any additional shares. This isn't optimal because I want to add to some REITs prior to the Fed pivot. I have flirted with the idea of increasing the sector allocation threshold to 25% but have decided against it. I will continue to allocate capital toward other areas of the portfolio while I wait for REITs to become a smaller percentage of the portfolio.

Individual equities now represent 37.48% of the Dividend Harvesting portfolio while generating 28.71% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 62.52% of the portfolio and generate 71.29% of the forward income. I plan on adding to every asset class within the Dividend Harvesting Portfolio throughout 2024, but in the early stages, I will try to divert capital away from REITs in the short term.

In week 157, the top-10 holdings remained the same, but SL Green Realty (SLG) went from the 9th largest position to the 6^th slot. Altria Group (MO) and Verizon (VZ) are both over 4%, and I am trying my best not to add to these positions. Honestly, it's hard not to add to Altria Group, as I feel it's undervalued. I realize I may be a bit bias, but when I look at a business, I am paying for its profitability, and Altria is trading at 8.11 times 2024 earnings while paying a dividend that yields 9.59%. Eventually, I hope that the top-10 flattens out a bit more, and that no positions represent more than 4% of the portfolio.

I am glad that so many readers are enjoying this section. If there was a way for me to have all of the data autopopulated, I would gladly do this for the entire portfolio. I think it's very interesting data, but it's actually quite time-consuming to put together and takes time to maintain. Maybe in the future, I will expand it to the top-20 positions. I have allocated $5,017.99 to the top 10 positions in the Dividend Harvesting Portfolio, and they have generated $546.31 in dividend income. Overall, these positions have generated 10.89% of my original investment from their dividend income. The top-10 positions are now valued at $5.757.25, which is an ROI of $739.26 or 14.73%. These positions are projected to generate $478.22 in annualized income, which is a forward yield of 9.53% on invested capital. The top-10 holdings within the Dividend Harvesting Portfolio represent 33.71% of the total portfolio value while contributing 34.42% of the total dividend income being generated. It will be interesting to see how long it will take for the first position to pay for itself from the dividends that are being generated.

Week 157 additions

In week 157, I added to my existing positions in:

• Pfizer
• Cohen & Steers Infrastructure Fund

Pfizer

• I see Pfizer as a value play in 2024. Pfizer has declined by -33.82% over the past year, and in 2024, it's down -7.64% to start things off.
• Pfizer trades at 12.11 times 2024 earnings and 0.68 times 2025 earnings. Pfizer is expected to grow its EPS by 25.22% next year, and trading at, I believe that it's trading at too cheap of a valuation based on its profitability.
• Shares of Pfizer have declined so much that shares have a yield of 6.32% from the $1.68 dividend payment. I think this is a turnaround story, and I am willing to collect and reinvest the dividends as I wait for it to play out.
• Pfizer has grown its dividend for 13 consecutive years, and there is more than enough earnings growth to continue its dividend increases in future years.

Cohen & Steers Infrastructure Fund

• I added shares of the Cohen & Steers Infrastructure Fund again because they were so close to generating an additional share annually from its distributions.
• My investment thesis hasn't changed from last week as I feel the underlying companies in the Cohen & Steers Infrastructure Fund will have several years of tailwinds as government funding in infrastructure continues to flow into the market
• I am also very happy collecting a monthly distribution that has an annual yield of 8.36%

Week 158 Gameplan

Next week may be a replica of week 156. I may add another share of the Cohen & Steers Infrastructure Fund so it generates more than 1 share a year from its distributions while adding a share of the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) to get it closer to generating at least 1 share annually from its distributions.

Conclusion

The amount of dividend income being generated continues to grow, and the power of compounding is really starting to take effect. I am now generating roughly $3.81 per day in dividend income from this portfolio, and the number is only growing. I am excited to see where the Dividend Harvesting Portfolio ends up at the end of 2024 as it continues to generate weekly dividend income, mitigate downside risk, and provide capital appreciation. I am confident that no matter what the outcome of the next Fed meeting is, the Dividend Harvesting Portfolio will continue to live up to my expectations. Week 160 is rapidly approaching, so please leave all your suggestions in the comment section, as I will be adding an investment from the reader's suggestions.