Dividend Harvesting: Week 31 Update, $3,100 Allocated, $215.44 In Annual Dividends Yielding 7.02% With 48 Positions

Summary

• After 31 weeks and $3,100, the Dividend Harvesting Portfolio is generating $215.44 in estimated annual income and $17.95 in monthly estimated income.
• In week 31 I added to my current positions of Starwood Property Trust, Omega Healthcare Investors, the PIMCO Corporate&Income Opportunity Fund, the Global X SuperDividend Alternatives Fund.
• The Dividend Harvesting Portfolio is now generating 50 weeks of dividend income from 368 annual dividends with another 23 positions paying an estimated $14.30 throughout October.

Ghing/iStock via Getty Images

This article series is dedicated to everyone in the Seeking Alpha community interested in building an income-producing portfolio. Investing in equities and funds that produce dividends has been part of my overall investing strategy for some time. I have received many comments and messages during my time as a contributor to Seeking Alpha asking me specific questions about how to start a dividend portfolio, where to start, and how much capital is needed to make this strategy work for them?

There is a serious misconception about dividend investing revolving around the amount of capital someone needs to make this an effective strategy. There isn't a one-size-fits-all investing strategy, and many paths throughout the investing space can help investors reach their end goal. For some, continuously investing in an S&P 500 index fund or a total market fund will do the trick. For others, a combination of equities and funds works well.

For me, I invest in funds, individual equities, and dividend-producing investments. I started this series to illustrate how someone could start from scratch and build a dividend portfolio from the ground up by investing on a fixed budget. I am allocating $100 a week to this series and its investments. I have allocated $3,000 over 30 weeks to this specific portfolio. My positions include 10 Closed-End Funds (CEFs), 8 ETFs, 3 BDCs, 2 ETNs, and 25 individual equities.

Diversification has been one of the fundamental principles of constructing this portfolio, and I continuously read comments indicating that I have too many positions. This would be entirely too many positions for some investors as it creates a substantial amount of ongoing work to stay current on the positions. I have plenty of time to conduct the necessary ongoing research for my investments, and I am building this portfolio into a personalized dividend fund for myself. Eventually, when we experience a correction or bear market, I believe this portfolio will navigate the adversity well as it's not overweight in a specific individual equity or sector, and the dividend snowball effect will continue to amplify as the months come and go.

In week 31, I allocated my $100 to current positions. I added an additional share to Starwood Property Trust (STWD), Omega Healthcare Investors (OHI), the PIMCO Corporate&Income Opportunity Fund (PTY), the Global X SuperDividend Alternatives Fund (ALTY), and the Tekla World Healthcare Fund (THW). I wish I could add everything at once, but I need to be disciplined, and since this concept is working with a set budget, I am not going to change the mission and start adding additional capital. Southern Company (SO) almost made it as it's been selling off lately, and after reading through Intel's (INTC) numbers, it was hard not to add them in week 31.

(Source: Steven Fiorillo)

I have made this Excel file that I update each week free to download for anyone who wants a copy. If you would like a copy, please click here and go to Dividend Harvesting. Everything in the sheet is live so that you can plug in your investments, and the charts and spreadsheet will update, providing you with your own personal tracker. If anyone has any ideas for enhancements after playing around with this, please let me know, as I am happy to make improvements.

A look inside the Dividend Harvesting portfolio

After 31 weeks of investing $100 per week, below is an overview of the Dividend Harvesting portfolio's composition:

(Source: Steven Fiorillo)

Since 4/12/21, when the first dividend was collected in the Dividend Harvesting portfolio, 129 dividends have found their way into my account. So far in October, 3 positions have paid me $1.12 in income, with another 23 positions paying an estimated $14.30 throughout the month. The ongoing cycle of dividends is exciting, and after my recent additions, an estimated 86 dividends will flow into my account throughout the rest of 2021.

Some of the comments have indicated that this portfolio is a waste of time, and why am I not focusing on the winners from the portfolio instead of over diversifying? Everyone is entitled to their own opinion, and everyone's investment strategy is different. These aren't my only investments. As I indicated in the opening, I am creating this portfolio from the ground up and documenting the progress along the way, and turning it into a series on Seeking Alpha. Remember, every investor's situation is different, and there aren't many articles that illustrate building a dividend portfolio from the ground up. One of my goals is to make this series relatable to the masses and show that anyone can start investing with any budget. Even if you are not fond of dividends, the strategy of allocating a fixed amount of capital every week, month, or quarter can be replicated to index funds, growth companies, or anything that meets your investment goals. Overall I want to emphasize the importance of allocating capital to savings or investments and planning for the future.

This portfolio accomplishes my primary goal of generating a continuous income stream that increases with each addition and dividend reinvestment. There will be periods in the future when the market corrects, and this portfolio is in the red, and there have been some weeks where I thought that would occur over the last 31 weeks. This portfolio isn't about growth, it's about generating income, and more importantly, I hope it teaches the importance of saving for the future. 31 weeks have flown by, and anyone who decided to follow the premise of saving money each week regardless of how they wanted to invest it would have a nice start to their investing future. I am choosing to invest this capital in dividend investments so I can expand my passive income. After 31 weeks of allocating $100 per week, the Dividend Harvesting portfolio is now generating an estimated $215.44 in estimated annual income with an estimated monthly average of $17.95.

• Estimated Annual Dividend Income
  • $7.44 to $215.44, an increase of $208 or 2,795%

• Estimated Monthly Dividend Income
  • $0.62 to $17.95, an increase of $17.33 or 2,795%

• Annual Dividends Generated
  • 12 to 368, an increase of 356 dividends or 2,967%

• Weekly Dividends
  • 9 weeks to 50 weeks

(Source: TD)

I am still stuck on 50 weeks of dividend income, with 368 dividends flowing into my account over the year. I will eventually generate income every week, but I have no idea when that will occur. In some months, I still can't get over that; I have 35-39 dividends being generated. I can't imagine what this will look like in 10, 20, or even 30 years from now.

(Source: Steven Fiorillo)

New Goals and Rules

After going through my holdings in the Dividend Harvesting portfolio, I have come up with two goals that will turn into rules once they are met. After the first year and $5,200 is allocated, I don't want a single sector to account for more than 20% of the entire portfolio. REITs have been coming close as they make up 18.75% of the holdings within the Dividend Harvesting portfolio. 20% will be my overall benchmark of a limit not to exceed for a single sector.

After the first year, the second goal is that I don't want a single position to exceed 5% of the portfolio. Currently, AT&T (T), Altria (MO), and Exxon Mobil (XOM) all exceed 5% of the overall portfolio value. T currently represents 7.97% of the portfolio, while AGNC Investment Corp (AGNC) is equivalent to 2.6% at the tenth-largest holding. Once this is accomplished, I am going to keep the 5% rule for this portfolio going forward.

(Source: Steven Fiorillo)

New dividends being generated annually

Just as important to generating continuous dividend income is having the share count of an investment increase without adding additional capital, and there is a lot of work to be done. Outside of generating reoccurring dividend income, one of my top priority long-term goals is to have each position generate enough dividend income annually to purchase 1 additional share. Eventually, I want an additional share of each position coming in every quarter. After this occurs, the next level would be to replicate the process on a bi-annual basis, then quarterly.

In week 31, I had some movement as STWD and OHI moved into the 40-49.99% category. MO and Tekla World Healthcare Fund (THW) both moved into the 30-39.99% category as well. Going forward, one of my goals is to get more of these symbols moving right on the grid I created below. It will take some time, but eventually, I want these positions to produce an additional share annually.

(Source: Steven Fiorillo)

Week 31 additions to the Dividend Harvesting portfolio

If you have been reading this series for a while, you are probably tired of me discussing STWD. I am a fan of their CEO, Barry Sternlicht, and happen to believe STWD is one of the best REITs to invest in. STWD has been a dividend powerhouse for the past decade and hasn't missed a dividend payment. STWD operates through four segments: Commercial and Residential Lending, Infrastructure Lending, Property, and Investing and Servicing segments creating a well-rounded REIT that was able to fend off the pandemic hardships. The next REIT I invested in was OHI. Just like STWD I have been a shareholder of OHI for years and have gone through its ups and downs. Recently, OHI informed shareholders that three operators accounting for about 9% of the company's estimated contractual rent and mortgage payments in Q3 2021 have stopped making rent payments in 2021 due to the COVID-19 impact on occupancy. This is a new development as when OHI reported Q2 2021 earnings on 8/2/21, their quarterly FFO increased from $0.81 to $0.85. OHI also disclosed that in Q3, OHI collected ~98% of contractual rent and mortgage payments for the month of July, 98% for Q2, and over 99% in Q1. I believe that the rent and mortgage payments will be a short-lived obstacle, and I decided to view this as an opportunity to add to my position.

I used the remaining capital to add an additional share in PTY, ALTY, and THW. PTY recently declared a reduced dividend of $.1188 per share from $0.13, which is not what I wanted to see. PTY is still generating a forward yield of 7.7% and, over the past five years has generated significant capital appreciation to its shareholders. I am sticking with PTY and adding to my position as it dips. THW is still one of my only exposures to healthcare. THW's top holdings include UnitedHealth Group (UNH), Abbott Laboratories (ABT), AbbVie (ABBV), Johnson & Johnson (JNJ), Medtronic (MDT), and Eli Lilly (LLY), which are all companies I am interested in owning individually. By owning THW, I am getting a large yield, monthly dividends, and exposure to companies I want to own. This interesting CEF throws off a yield of 8.36%, with dividends being generated monthly. Lastly, for week 31, I added to ALTY, which is an ETF from Global X that provides exposure to a range of alternative income-generating categories, including MLPs & Infrastructure, Real Estate, Preferred Stock, Emerging Market Bonds, and Covered Calls. I like the diversification of this fund and, like many of its individual positions such as Icahn Enterprises L.P. (IEP), Enterprise Products Partners (EPD), and Duke Energy (DUK). I believe many of the companies found within ALTY will get a significant boost after an infrastructure bill is passed.

Week 32 gameplan

There is one new company I am considering, and that is a Buffett stock that has been decimated. I submitted an article to Seeking Alpha about Kraft Heinz (KHC), and after tearing through the numbers, I believe they are undervalued. I also believe KHC's dividend is secure with a forward yield of 4.34% and an increasing free cash flow position. I also recently wrote an article on Intel (INTC), and I am blown away by their numbers. INTC is a cash cow that's been growing even though its share price is lower today than it was in 2000. INTC pays a forward yield of 2.6%, and I am expecting them to continue their 7 years of dividend increases. Some of the other companies from my current positions I am considering are I want to add to Southern Company (SO), Verizon (VZ), The Coca-Cola Company (KO), and Enbridge (ENB).

Conclusion

I want to say thank you to everyone who continues to read and comment on the Dividend Harvesting series. I am looking forward to engaging with everyone in the comments section and gaining perspectives and ideas for new investments. It's hard to believe that 30 weeks have gone by. I am enjoying documenting this journey and look forward to the progress in the years to come. I hope that individuals see this blueprint and incorporate the practice of investing on a schedule into their savings routine. Hopefully, everyone is enjoying this series, and your goals of reaching financial independence get closer with each investment you make.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of STWD, OHI, THW, PTY, ALTY, INTC, SO, XOM, MO, T 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.

I am long every position in the Dividend Harvesting Portfolio. 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. Investors should conduct their own research before investing to see if the companies discussed in this article fit into their portfolio parameters.

Comments

[Gober Sensei, Senshikan Jujitsu Daito Ryu]

nice portfolio however just maybe want to trim the amount of positions. ALTY is so diverse that many of your positions are double dipped. you could probably trim out 12 easily and still be averaging around 7 to 9 percent without being over diversified

[John749]

You are on the right track to be an Income buyer, compounding units/shares. I am an income buyer too. We live on half our income and reinvest half. Personally I have narrowed my holdings I find my brain can make good decisions for 10 or 12 stocks that I can fully understand when to buy when to hold and when to rebalance many have become fixed holdings due to low basis high returns. It really clarified my thinking when I focused on increasing
my income. For example last January when I was scheduled for my first vaccine shot my brain went to, what will immediately benefit, my first answer being a Grand Parent we would all travel to see our families. I researched gasoline and rebalanced heavily into PSXP with a $3.50 distribution and SUN with a $3.30 and continued to add from income. It also allowed me to reach expert knowledge levels on a few of my largest holdings like EPD it then is easy for me to know to ignore a Zacks #5 must sell notice when EPD fell to $21.00 two weeks ago, I immediately raised my holdings 15% selling many good shares to trade up to a better long term holding. I actually added more yesterday at $23.50 still barely in my buy range. I have one new stock I am beginning a position and will add heavily from my November cash flow, another future thinking move. Also a must sell.
Best Luck
John

[baggett.brad]

On your new/future rules, how will you handle CEFs and ETFs? Will you limit either to <20% and a single one to <5%?

[Steven Fiorillo]

@baggett.brad Hey Brad, undecided. I am considering breaking them off into their respective catagories.

[baggett.brad]

@Steven Fiorillo I broke the ones that I could into categories, but most seem to be diversified. So I left those as CEFs or ETFs. I’ve somewhat had the same general rules that you’ve come up with but I was curious how you would handle it. For me I am undecided as well because as I said they are diversified.

[Steven Fiorillo]

@baggett.brad I am in a similar situation. I am going to toy around with the idea of placing dedicated ETFs and CEFs like AMLP in oil and gas then leave diversified funds in a separate category. I need to see

[Monthly Income Investor]

The problem is.... a lot of your good dividend payers right now are reits...so its hard not to have them be a large %.

[Steven Fiorillo]

@Monthly Income Investor In the early stages yes, but over the next several years I think the allocation percentages will look much different.

[Monthly Income Investor]

@Steven Fiorillo I agree. Just saying currently it's difficult to not be looking at reits. Every time I look at add something.. its a reit these days. I am hoping that changes over time.

[Queen of Covered Calls]

Hi Steven,
Thank you for another great write up.
I am happy to see you are implementing sectors limits now and later ticker limits. I use the official 11 sectors as well as an ETF sector, I invented. It has ETFs. I don't know how to other classify QYLD or RYLD etc.
While I have not written down my limits yet, it is the reason that I only track sectors for my portfolio and cash.
I am with you with limiting a sector to 20%. However right now I am willing to give my ETF sector 25% as an exception to the rule.
I assume you are overhauling the spreadsheet a bit as the posted one still is the one from week 23?
You can read about my portfolio and my objectives here: myinvestingandtradingjourney.blogspot.com/...
Question: have you looked into QYLG or XYLG?

Again, thanks for all the posts.
Have a great weekend.

[Steven Fiorillo]

@Queen of Covered Calls Thanks for continuing to read and comment. I have been toying with the idea of breaking out the CEF and ETF section and classifying them but sectors. I am going to read through your link, I appreciate it

[sc21]

@Steven Fiorillo
etfs a d cefs are platforms not specific forms of content, why would you want to give them special categories? I guess if you feel that these wrappers somehow impact outcomes that it might be a good idea but really it is confusing content with format. Bottom line is I fail to understand your logic here and your comments have not really clarified- could u do so. thanks sc

[Phillip French]

Hey Steven, good read. I am now following your investment journey. My time window is shorter so I started my portfolio a few years ago. I have many of the stocks you mention. I look for both value as well as decent yield to build my income. Price matters. And sometimes patience and restraint are crucial, as we all witnessed the Covid crash. Without putting in new principal, I saw my portfolio fall from about 250, 000 to 123,000, and since rise to over 270,000. I need some strategic shifting and re-invested dividends but generally avoided the herd panic selling. Still under water on some, but also got some great buys along the way.

[Steven Fiorillo]

@Phillip French Hey Phillip, thanks for reading and commenting. What were some of the pick-ups you made along the way?

[Phillip French]

@Steven Fiorillo Hey Steve, picked up WPC at 40.00, RTX at 59.00, IBM at 113.00, and UPS at 97.00 to name a few. Of course, just about everything was cheap March-July when the pandemic hit. I picked up PNW this week, could be a temporary falling knife. For BDC stocks, BDC Buzz is excellent, Stanford Chemist, Nick Ackerman and Steve Bavaria are good analysts on CEF'S, and Colorado Wealth has excellent information as well. Good luck to all!

[Tyreswat]

Nice as always…
No CEFs for me but I also bought some OHI and more BTI + MO after this regulation fall. Have a good position in STWD too but all comes from the 14-16$ area where you could have bought last year. Now at 25 it’s gone to high for me. May be you should look to BMY now for next week - they are crazy cheap at this time. Also PNW is appealing now.

Greetings from Germany!

[Steven Fiorillo]

@Tyreswat Thanks for reading and commenting. BMY is on the list and I keep saying I want to add it. I also like ABBV and Novartis

[Tyreswat]

@Steven Fiorillo I already have this 3 stocks and also in my healthcare basket some MRK, PFE, VTRS, JNJ, GSK, AMGN, NOVO… and healthcare reits OHI, MPW, DOC and new since last week NHI too. I like to spread the account to more smaller positions and fill up what the market shows me a make sense. Your total numbers of stocks is not really much like other people say, only my „Venture-Gamble-Depot“ has more positions. There are also some small bets in companys like TDOC, NVAX, Alibaba Health, PLTR, SOFI just to name some.
Good luck and
Greetings from Germany!

[6BQ5]

Hi @Steven Fiorillo !

It looks like your online sheet is still showing an investment of $2300. Will you be uploading an updated version of the sheet?

[Steven Fiorillo]

@6BQ5 I will check and see whats going on, thanks

[Yields4Travel]

I also have enjoyed following along on your journey Steven. I also have ORI, so I reinvested the special dividend back into the company. It was my 2nd special dividend. I am retired, but not living on my dividends. I had held KHC from its MO spinoff, but recently sold at a small profit. Added more shares to my long holding HRL to make up for the lost KHC dividend. Thanks @Steven Fiorillo

[Steven Fiorillo]

@Yields4Travel I should look into HRL, it was mentioned by someone else previously. Thanks for the idea, appreciate it

[Loki_Disciple]

another week, another layer on your dividend snowball...

I also added another layer...its a beautiful thing

[Steven Fiorillo]

@Loki_Disciple Cheers!! what did you pick up?

[Loki_Disciple]

@Steven Fiorillo I had more than my normal capital to allocate after selling some company stock, so big purchases last week. Still have a bit of capital to use, so we'll see what looks good this week.

1 JNJ - 4.24
1 MMM - 5.92
3 O - 8.496
3 VTRS - 1.32
1 WPC - 4.21

12 Month - 24.346
Month - 2.028
Day - 0.066

[Mawyai]

I too like seeing your progress. I am sure some will criticize your number of holdings, not me. We have 14 in common and I have over 100 holdings. What I like about your "project" is that you're proof that investing just needs to start with small steps and seeing their growth and, with dividends a revenue stream, it is exciting. Truly a lesson every young person needs to know and understand. Sadly, I still wait for my three sons 36-40 to learn it. Now, with no commissions and things like $50 "slices" that my broker offers, there is no reason not to get involved.

[amegalo]

@Mawyai maybe someday(after you’re gone) one of them may say. “ gee I think dad was right”)

[Steven Fiorillo]

@Mawyai Thanks I really appreciate it. I really hope this series does just that, and gets more people interested in investing, and gets rid of the stigma that you need a lot of capital to start investing. It doesn't matter if it's $100, $1,000, $10,000, o $100,000 you can make any amount of money work for you.

[BigBen82]

I enjoy following this project. For some reason my head keeps telling me that 48 positions for only $3,100 dollars invested seems watered down. Of course I could be missing the mark.

[Steven Fiorillo]

@BigBen82 Thanks for reading and commenting. Let me try to describe it differently. Look at this project as owning a business. When you own a business do you have someone telling you each day how much the business is worth? Nope. The main thing you care about is cash flow unless you're looking to expand or sell. By adding many funds and individual companies you're creating an overall business from many fragments of businesses in different segments to generate consistent cash flow.

[amegalo]

Thanks for another great update..I hope you enjoyed receiving that special dividend from ORI. (I received well over $800.)
You mentioned. “After the first year, the second goal is that I don't want a single position to exceed 5% of the portfolio”

In addition to that rule , it might be useful to track the percentage of your portfolio’s income come from each issue. I like to track not only the holding size in relation to the entire portfolio but also where the cash flow actually comes from.

FYI this week KMB went on sale so I added to my exhibiting position .. also started a small position in MKC.( Near its 52 week low) as restaurants rebound from COVID.
Take care.

[Just One Lab Nerd]

@amegalo - Yeah - that's a nice special dividend from ORI. I'll plan on adding some more of that before their next regular ex-dividend date. How regular are the special dividends for ORI - since you appear to have more than a few of those shares in your portfolio.

[amegalo]

@Just One Lab Nerd This is the third time I received a special from ORI since 2017.. The past is no guarantee of the future. If you look up the ORI symbol on seeking alpha and click on dividends and dividend history. You can see. This one was 1.50/ share. The past two specials were 1.00/ share. I believe (not sure)
but these help ward off special interest activist groups. See link

www.boardex.com/...

[Steven Fiorillo]

@amegalo Thanks for continuing to read. Next year I plan on tracking some items such as cash flow per security over the calendar year. I like KMB and will look into MKC, thanks

[sc21]

Thanks for the project but it would be helpful if you could provide a bit of color on the issus which you are adding i.e. altx- -would like to know you thinking on why you elected to add now. Just my view thanks sc

[RJCanuck]

Great teaching/learning tool! Please keep up the good work.

[Steven Fiorillo]

@RJCanuck Thanks for reading and commenting, I am glad you enjoyed it

[Just One Lab Nerd]

As usual a good read Steven. I like your new goal and rules bit as well. Enforced diversification is going to lead to longer-term stability. I'm a bit heavy in REITs at the moment, but may stay that way with a more concentrated set of stocks, but with the idea that if one of those starts to falter, I will sell out of it and buy into something else that is doing better.

Bought some KMI as planned last week. Probably won't buy anything new until next week. Got that nice special dividend for ~$6 from ORI on Monday,... Will probably buy some UMH or more BP next week. Cheers Sir!

[Steven Fiorillo]

@Just One Lab Nerd Thanks for continuing to read and comment. I am a big fan of KMI. Have you added ENB yet?

[Just One Lab Nerd]

@Steven Fiorillo - I have not looked at EMB. I have been sitting on a small set of TRGP since the rolled in their old NGLS subsidiary and didn't want too many midstream type companies. TRGP got overleveraged a few years ago and tanked share price wise and it's dividend dropped like a stone. However, now that they have their finances back on track their share prices has been very much on the rise. Was considering jettisoning TRGP and taking the profits, and then reallocating it into something else.

[Chipscaddys]

Steven, I am a new follower, and have to say I am impressed with this project. Too many times potential investors are intimidated by 'if you invest $10,000 in stock *&^" syndrome.
$100 a week may be out of the reach of some people, but I believe you have hit the sweet spot, by showing that even a minimal investment over time will produce amazing results. Bully for you.
Now I just need to get my children and their spouses to read this! (LOL). They all have 401k's but I'd like to see them do a little investing on the side as well.

[motto5448]

very high risk for taxable dividends

[dye1199]

@motto5448 can you elaborate? Kind of a poor statement with nothing to substantiate it.

[Steven Fiorillo]

@motto5448 What's the risk? I don't mind paying taxes on dividends