Dividend Harvesting Week 82 Update: $8,200 Allocated Yielding 8.04% Across 79 Positions

2022 feels like the year nothing is going correctly, and while the Fed hike of 0.75 basis points was expected, Jerome Powell’s speech rocked the markets once again. Last week the S&P 500 declined by -4.11%, while the Nasdaq fell by -4.59%. The bear market has no end in sight as the June lows are being tested once again, with the Nasdaq down -31.36% and the S&P 500 down -23% in 2022. This could have been the worst single week for the Dividend Harvesting Portfolio as it declined to -9.48% (-$777.33) on invested capital. This is now the 12^th week the Dividend Harvesting Portfolio has finished in the red, bringing its overall percentage of finishing in the black to 85.37% (70/82). While being in the red is never fun, I see this as a phenomenal opportunity for long-term investors, and I have the next several weeks planned out of where I want to allocate the weekly capital if the markets don’t turn.

At the close of week 82, the Dividend Harvesting Portfolio generated $2.49 in dividend income from 5 positions. In 2022 I have collected $308.85 in dividends from 368 individual dividends. My allocated capital in week 82 went to adding an additional share in each of the following positions, Walgreens Boots Alliance (WBA), Intel Corporation (INTC), Ares Capital (ARCC), Medical Properties Trust (MPW), and New York Community Bank (NYCB). In week 82, my projected annual income increased by 1.18% to $596.65 as I gained $6.96 in annual dividend income. With the portfolio declining in week 82, the projected annual dividend yield now exceeds 8%. I plan on continuing to purchase additional shares of positions I feel are undervalued, and even if the bear market is extended into 2023, I believe this is a good time to put capital to work. The stock market is possibly the only area where sales are dreaded. I could be incorrect, but INTC yielding over 5% is a bargain, in my opinion, and while shares could go lower when Q3 earnings are announced, INTC should do just fine in the coming years.

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

The Dividend Harvesting Portfolio Dividend Section

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

• Equities $188.41 (31.58%)
• ETFs $132.31 (22.18%)
• CEFs $118.27 (19.82%)
• REITs $112.36 (18.83%)
• BDC $39.83 (6.68%)
• ETNs $5.46 (0.91%)

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 $308.85 in dividend income from 368 dividends across 38 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.

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.

The month of August has finished, and $46.62 of dividend income was generated and reinvested. This is a YoY increase of $33.19 or 247.13%. It will be interesting to see what happens as the years progress. I will continue plotting 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.

Currently, I am producing 588 individual dividends annually within the Dividend Harvesting Portfolio. I am not planning on adding any new positions over the next several weeks unless something really catches my eye. Below is how my projected stream of income will flow into my account.

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. There are now 10 total positions generating at least 100% of their share value in dividends within the Dividend Harvesting portfolio. This could fluctuate due to market volatility, but I am looking to have as many positions generating at least 1 share annually from their dividends as I can.

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.

In week 82, REITs remained as the largest sector of the Dividend Harvesting portfolio. REITs had a 17.1% portfolio weight, while ETFs maintained 2nd place, accounting for 16.4%. Individual equities make up 45.49% of the portfolio and generate 31.58% of the dividend income, while ETFs, CEFs, REITs, BDCs, and ETNs represent 54.51% of the portfolio and generate 68.42% 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	$1,266.19	$7,422.67	17.06%
ETFs	$1,220.08	$7,422.67	16.44%
Closed End Funds	$1,095.33	$7,422.67	14.76%
Oil, Gas & Consumable Fuels	$541.04	$7,422.67	7.29%
Communication Services	$513.79	$7,422.67	6.92%
Consumer Staples	$517.80	$7,422.67	6.98%
Technology	$511.99	$7,422.67	6.90%
Financials	$489.87	$7,422.67	6.60%
BDC	$423.99	$7,422.67	5.71%
Utility	$296.88	$7,422.67	4.00%
Pharmaceuticals	$219.47	$7,422.67	2.96%
Industrials	$115.36	$7,422.67	1.55%
Independent Power & Renewable Electricity Producers	$104.61	$7,422.67	1.41%
ETN	$36.38	$7,422.67	0.49%
Food & Staple Retailing	$66.09	$7,422.67	0.89%
Cash	$6.39	$7,422.67	0.09%

Click to enlarge

In week 82 VZ remained the largest position in the Dividend Harvesting Portfolio. VZ and INTC are the only positions that represent over 4% of the Dividend Harvesting Portfolio.

Week 82 Additions

In week 82 I allocated the usual $100 to the following positions:

• Intel Corporation (INTC)
• Walgreens Boots Alliance (WBA)
• Ares Capital (ARCC)
• Medical Properties Trust (MPW)
• New York Community Bank (NYCB)

Intel Corporation

• Shares of INTC have been cut in half over the past year, declining -49.07% and in 2022 is down -48.28%. I can’t predict the bottom, and I never thought INTC would fall under $30 but this is getting crazy. INTC is not some profitless tech company and INTC is not in danger of disappearing. We know Q3 will be bad, and that should already be baked into the price. I plan on adding to INTC as it’s yielding over 5% as this could be a great addition looking back several years down the road.

Walgreens Boots Alliance

• WBA was slightly lower than where I had initially purchased it, and I wanted to pick up another share with the yield almost at 6%.

Ares Capital

• In a matter of weeks, ARCC has declined by over -10% putting shares under $18 and pushing its yield to almost 10%. ARCC has done a fantastic job over the years of generating additional earnings to fuel its dividend. I believe management will utilize the capital from its latest offering to continue this trend. I wanted to add to the position as this is the highest quality BDC in my opinion.

Medical Properties Trust

• MPW is perplexing as shares continue on a downward spiral without bad news. Based on the numbers, MPW is one of the cheapest REITs by the valuation metrics I look at and I decided to add to my position. I will continue to add more if shares remain undervalued.

New York Community Bank

• I had $12 left and decided to add a share of NYCB. My valuation tables indicate that NYCB is undervalued compared to its peers, and its yield exceeds 7.5%.

Week 83 Gameplan

I plan on adding 1 share of Simon Property Group (SPG) as it closed at $90.18, placing its yield at 7.76%.

Conclusion

While the markets haven’t been friendly, I have a long-term time horizon and will continue to purchase shares of income-producing assets each week. Regardless if it takes 1 month or 1 year for the markets to see better times, I will continue to build out my positions in the Dividend Harvesting Portfolio and reinvest every dividend that is generated. Thank you to everyone who continues to read this series, and please leave your comments below.