Dividend Harvesting Week 49 Update: $4,900 Allocated $338.40 In Annual Dividends Yielding 6.62% Across 60 Positions

Feb. 10, 2022 9:00 AM ETVZ, STWD, ALTY, ECC, HBAN15 Comments

Summary

  • After 49 weeks and $4,900 allocated, the Dividend Harvesting portfolio is generating $338.40 in annual dividend income.
  • In week 49, I added to VZ, STWD, and ALTY.
  • The Dividend Harvesting portfolio has a 98% record of finishing the week in the black since its inception.
  • I do much more than just articles at Barbell Capital: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Business Trends Graphs and charts. Dollar sign with rocket

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After 49 weeks, I am pleased as to how the Dividend Harvesting portfolio has performed. This investment approach has focused on growing a portfolio of assets to deliver a consistent income stream while mitigating downside risk. Over the past 49 weeks, the markets have experienced volatility, sector rotations, and external impacts, yet this portfolio has finished in the black 48 of the past 49 weeks, which is a 98% ratio. Currently, I am up $209.47 (4.1%) as the portfolio value is $5,109.47, and this portfolio is positioned to generate $338.40 in annual dividends going forward. In the first five weeks of 2022, I have collected and reinvested $38.10 in dividends as the income stream continues to flow. We're headed into week 50, which is reader suggestion week so I will be adding some new positions based on suggestions from this series. I can't believe we're on week 50, it's like it was yesterday that I was pondering even writing this series. I plan to continue this portfolio and document after the one-year mark and continue to do so as long as readers are still enjoying the content.

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.

Dividend Harvesting Portfolio Overview

Dividend Harvesting Portfolio Overview (Steven Fiorillo)

The Dividend Harvesting Portfolio Dividend Section

This is one of my favorite graphs as it shows the trajectory of the annual dividend income this portfolio is projected to produce. By making weekly investments in income-producing investments and reinvesting the dividend income, the annual income continues to grow at a rapid pace. I started this account with $100, which allowed me to generate $7.44 in annual income. Since then, I have added 57 positions, and my annual dividend income has increased by $329.79 (4,432.66%). I'm especially excited for 2022 because in three weeks, the first year will be complete, and there should be around $350 in dividend income slated to be reinvested prior to any future weekly investments that generate dividend income. By making these investments, I have been able to create my own source of additional cash flow, and that is the real premise around this portfolio.

Weekly Annual Dividend Income Trend

Steven Fiorillo

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

  • Equities $126.28 (37.32%)
  • ETFs $74.60 (22.04%)
  • REITs $58.33 (17.24%)
  • CEFs (17.11%)
  • BDC (4.8%)
  • ETNs (1.49%)

Annual dividend income by category bar chart

Steven Fiorillo

Annual dividend income by category pie chart

Steven Fiorillo

I have collected and reinvested $38.10 from dividends in 2022. So far, 49 dividends have flowed into my account. This week I collected $14.77 from 20 dividends. Each investment I make has a specific purpose and helps buildout future cash flow. 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.

Weekly dividend collection detailed breakout

Steven Fiorillo

2022 dividends collected bar chart by week

Steven Fiorillo

It's been several weeks since I added a new position, and in week 49, I added to existing companies and funds within the Dividend Harvesting portfolio. I have continued to see opportunities within my portfolio during the market's volatility, so I have been averaging down on some positions. I'm still generating 456 annual dividends across 50 weeks throughout the year.

Dividends

Steven Fiorillo

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. As more companies move to the next column, slow and steady progress is being made. Eventually, positions will generate one share per year in dividend income.

Data on new shares produced annually through dividends prior to compounding

Steven Fiorillo

The Dividend Harvesting Portfolio Composition

ETFs remain the largest segment of the Dividend Harvesting portfolio. 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. I wish I could continuously add to many of my investments, but you need to pick and choose your spots when you're investing on a fixed weekly amount. Individual equities make up 49.54% of the portfolio while generating 37.32% of the dividend income. ETFs, CEFs, REITs, BDC, and ETNs represent 50.46% of the portfolio and generate 62.78% of the dividend income.

The Dividend Harvesting portfolio composition table

Steven Fiorillo

The Dividend Harvesting portfolio composition pie chart

Steven Fiorillo

In week 49, my goal of reducing my individual stock weighting to under 5% of the total portfolio allocation was reached. The combination of allocating additional capital each week and shares of AT&T (T) declining brought T's portfolio weight to under 5%. This isn't how I wanted it to occur, but going forward, there is a good chance none of my positions will exceed 5% of the total portfolio value.

Top 10 individual positions

Steven Fiorillo

Week 49 Portfolio Additions

In week 49 I added to my position in Verizon Communications (VZ), Starwood Property Trust (STWD), and the Global X SuperDividend Alternatives ETF (ALTY). Shares of VZ have declined by -3.32% over the past year, and I was down around -1%. VZ is a modern-day utility, and from an income perspective, there isn't much to dislike. VZ has one of the strongest higher-yielding dividends that someone could choose for their portfolio. VZ's dividend currently yields 4.8% as shares spin off $2.56 in cash. The dividend payout ratio is 46.94%, and VZ has rewarded shareholders with 17 years of dividend growth with a 5-year growth rate of 2.1%. VZ generates a secure dividend with a low payout ratio and a path for future growth. I added to this position for all of these reasons as it should continue to provide increases on an annual basis while providing a strong consistent yield.

My other 2 allocations for the week included STWD and ALTY. ALTY provides exposure to a range of alternative income-generating categories, including MLPs & Infrastructure, Real Estate, Preferreds, Emerging Market Bonds, and Covered Calls. ALTY is an interesting fund that provides a 7.43% yield through a broad diversification of asset classes. ALTY is made up of individual positions and several Global X ETFs. I was in the red on this, so I dollar cost averaged down on the position. As far as STWD, if you have been following this series, STWD is my favorite REIT. I think their CEO Barry Sternlicht is one of the best CEOs and I have been a shareholder for years in my main account. This has been a consistent company since I made my initial investment and has generated substantial cash over the years. While STWD is at the upper portion of its 5-year range, I think it will go higher as STWD made some strategic investments during the pandemic, which should start to pay off. STWD pays $1.92 per share, a forward yield of 7.86%.

Week 50 Gameplan

Reader suggestion week is upon us. Every 10 weeks, I use my allocation to add positions that the readers of this series suggest. I am considering two companies: Eagle Point Credit Company (ECC) and Huntington Bancshares Incorporated (HBAN). I need to conduct more research on both, but I am fairly certain at least HBAN will be added.

Conclusion

Thank you to everyone who continues to read this series. Creating a passive income fund isn't an investment approach that everyone believes in, but it's one of my investment cornerstones. I have a comprehensive investment approach where I invest in growth companies, value companies, and dividend companies/funds. I also utilize an indexing approach with funds for my retirement accounts. Income generation is just one aspect that I focus on when planning for the future. The passive income I'm generating will act as additional income in retirement. I look at this as a Barbell approach because I utilize several aspects of investing in my overall approach.

Barbell Capital provides investors with a comprehensive approach that utilizes growth, value, dividends, and options for income, to generate alpha in your portfolio while mitigating downside risk. Within Barbell Capital you will find exclusive research, model portfolios, investment tools, Q&A sessions, watchlists, and additional features for its members. There is also a live portfolio dedicated to generating capital from trading, selling puts, and selling covered calls. The profits will be allocated to future capital appreciating investments and investing in dividend investments to generate income while we sleep. Join today with a two week free trial!

This article was written by

Steven Fiorillo profile picture
21.62K Followers
Author of Barbell Capital
Build your portfolio utilizing growth, value, dividends and options

I am focused on growth and dividend income. My personal strategy revolves around setting myself up for an easy retirement by creating a portfolio which focuses on compounding dividend income and growth. Dividends are an intricate part of my strategy as I have structured my portfolio to have monthly dividend income which grows through dividend reinvestment and yearly increases. Feel free to reach out to me on Seeking Alpha or https://dividendincomestreams.substack.com/

Disclosure: I/we have a beneficial long position in the shares of STWD, VZ, ALTY, 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.

Additional disclosure: 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.

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