Dividend Harvesting Portfolio Week 126

PM Images

This was an eventful week for U.S. economics. The Fed raised the target range for the federal funds rate by 25bps to 5.25%-5.50%, which was what the market expected. The U.S. economy expanded by 2.4% QoQ as the GDP growth rate just completed its 4th consecutive quarterly expansion. Unemployment also fell by 7,000 while personal spending increased by 0.5% in June. The markets sold off after Jerome Powell spoke, but his speech was dovish; in my opinion, the markets finished the week in the black as the S&P 500 rose 0.62%, and the Nasdaq increased by 1.62%. I have said it before, and I will say it again, it's very hard to convince me a recession is approaching when GDP continues to expand, unemployment declines, and spending increases. While we're not out of the woods yet from earnings season, but if Apple (AAPL) and Amazon (AMZN) continue the trend of top and bottom-line beats, the markets could be on track for a strong 2nd half of 2023. Regardless of what occurs, I will continue allocating capital in this portfolio and in my main accounts.

In week 126, the Dividend Harvesting Portfolio closed in the black for its 5th consecutive week. It finished the week with a balance of $13,366.94, a 6.09% profit on invested capital. I generated $10.42 of dividend income in week 126 and have collected $507.50 in dividend income YTD. In week 126, I added to my AT&T (T) and Rithm Capital Corp. (RITM) positions. The Dividend Harvesting Portfolio closed week 126 increasing its projected annual income by $9.43 or 0.88% to $1,082.10, which is an 8.10% forward yield on the portfolio balance. I expect that as the year progresses this number could increase to $1,200 - $1,300 of forward projected income by the close of 2024. I am excited for the future and to continue documenting and building out the Dividend Harvesting Portfolio for all the readers of this series.

Steven Fiorillo, Seeking Alpha

The market keeps appreciating, and the Dividend Harvesting Portfolio's balance is following along. Since week 121, the Dividend Harvesting Portfolio has gone from being in the red -0.82% (-$98.62) to being in the black by 6.09% ($766.94). I am not trying to beat the market, but seeing the portfolio continue its string of weeks in positive territory is more exciting than hovering around its invested capital level. This portfolio has done exactly what I want it to do. It has mitigated downside risk during times of adversity, provided an ongoing string of income, and benefited from appreciating markets. I have built this portfolio to navigate every economic cycle, and my focus will be to allocate capital in a way that stays true to its core principles.

Steven Fiorillo, Seeking Alpha

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

Steven Fiorillo, Seeking Alpha

Steven Fiorillo, Seeking Alpha

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 29 of 2023, I collected $10.42 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 have generated $507.80, which is 103.47% of my total 2022 dividend income. I have collected 361 dividends, which are 67.73% 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. Eventually, this portfolio will be producing $100 per month of dividend income, and at some point in the future, if I continue down this path, I believe it will generate over $1,000 per month of income.

Steven Fiorillo, Seeking Alpha

Steven Fiorillo, Seeking Alpha

July is coming down to the wire, and so far, I have collected $72.40 in dividend income. The Dividend Harvesting Portfolio has now exceeded the amount of dividend income generated in July 2022 by 104.17%. The YoY increases in the chart below are quite drastic, and I am excited to see how the year finishes out and what next year looks like.

Steven Fiorillo, Seeking Alpha

I am using The Dividend Tracker to track my upcoming dividend income. This tool allows me to visualize my data down to the day. I need to go in and update a bunch of the data. Lately, I have only been updating the positions I add capital to, not the new share amounts from reinvesting the dividends. This is why the annual income is a bit different than what I am posting in the other sections. Eventually, I will sit down and update everything in the program. July will be a strong month, and the way things look, October may be the first month that my dividend income exceeds $100. After this summer's investments, I feel that this can be accomplished.

The Dividend Tracker

I have broken this into two sections, positions not generating at least one share per year through its dividend and positions that are. In the section for the positions that are, I have shaded it green and added how many shares annually are being generated and the new future dividend income those new shares will generate. In week 126, there were 26 positions generating at least 1 share annually through their dividends. These new shares from the top 26 positions are projected to add an additional $77.41 of dividend income annually. I am going to work on getting more positions over to the green block with a new goal of generating an additional $100 of dividend income from new shares generated.

Steven Fiorillo, Seeking Alpha

Steven Fiorillo, Seeking Alpha

ETFs continue to decline as a percentage of the Dividend Harvesting Portfolio, while REITs continue to increase. Once again, I couldn't resist, and I added to RITM. By the end of the summer, I will try to have REITs under the 20% level. Individual equities comprise 39.82% of the portfolio while generating 29.78% of the income, while ETFs, CEFs, BDCs, and REITs account for 60.18% of the portfolio and 70.22% of the dividend income.

Steven Fiorillo, Seeking Alpha

Steven Fiorillo, Seeking Alpha

Steven Fiorillo, Seeking Alpha

In week 126, all the positions that were over 4% saw a decline in their percentage of the portfolio. Eventually, this will continue to flatten out, and while none of the positions are dangerously close to the 5% threshold I have established, I am not planning on adding to the top positions for a while.

Steven Fiorillo, Seeking Alpha

In week 126, I allocated the weekly $100 of capital toward purchasing 4 shares of each of the following positions:

AT&T

Rithm Capital Corp.

Seeking Alpha

There is a good chance I will be adding to Ares Capital (ARCC) in week 127.

As an income investor, I love looking at the annual dividend income chart below. These are not my only investments, and I am writing this series to document building an income-producing portfolio from the ground up on a budget. I have received many messages from the lens of needing a large amount of capital to benefit from income investing. By investing $100 per week, over the last 127 weeks, I have created a portfolio with 87 positions that have mitigated downside risk during periods of extreme uncertainty and is now producing $1,082.10 in forward dividend income. As time goes on, I expect that this portfolio will increase the rate at which the compounding effects occur due to every dividend being reinvested and by continuing to invest $100 per week. I am excited to see where this portfolio ends up at the end of 2023 and in the years to come. Please leave all your comments below as I try to interact with as many people as I can in the comments section.

Steven Fiorillo, Seeking Alpha

Steven Fiorillo, Seeking Alpha

This article was written by

Analyst’s Disclosure: I/we have a beneficial long position in the shares of T, RITM, ARCC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Disclaimer: I am not an investment advisor or professional. This article is my own personal opinion and is not meant to be a recommendation of the purchase or sale of stock. The investments and strategies discussed within this article are solely my personal opinions and commentary on the subject. This article has been written for research and educational purposes only. Anything written in this article does not take into account the reader’s particular investment objectives, financial situation, needs, or personal circumstances and is not intended to be specific to you. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters. Just because something may be an enticing investment for myself or someone else, it may not be the correct investment for you.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.