Dividend Harvesting Week 75 Update: $7,500 Allocated, $533.42 In Annual Dividends Yielding 7.04% Across 78 Positions

Aug. 11, 2022 9:00 AM ETARCC, INTC, META, MO, OHI, QYLD, STWD, VZ, XYLD53 Comments

Summary

  • After 75 weeks and $7,500 allocated, the Dividend Harvesting portfolio is generating $533.42 in annual dividend income.
  • The Dividend Harvesting portfolio has an 89.33% record of finishing the week in the black since its inception, 67/75 weeks.
  • In week 75, I added to my positions in ARCC, INTC, and XYLD.
  • 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 »

Stock photo of an ascending staircase of coins on a blue background with a jar full of coins. Saving concept

Adrian Vidal

I cannot believe that it's been 75 weeks since I started this dividend investing series on Seeking Alpha. Over time I believe this series will prove you can take advantage of dividend investing without a large amount of seed capital. The most important part, in my opinion, just like saving for retirement, is to create a plan and stick with it. This series proves that no matter how much capital you can invest, sticking to a weekly or monthly allotment can pay dividends in the future. If you go back to the comments in the first several articles, people had written that this was a horrible idea and a waste of time. 75 weeks after allocating $100 each week and through a pandemic, the war in Ukraine, inflation, and now a recession, the Dividend Harvesting Portfolio is positive, generating $533.42 in annual dividends.

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.

The Dividend Harvesting portfolio's 6-week has been snapped, and while the portfolio retraced a bit, it's now closed in the black for its 2nd consecutive week. Since its inception, the Dividend Harvesting portfolio has closed in the black 89.33% of the time (67/75). The markets seem as if they want to rally, and the week of 8/8 is critical as the July inflation rate and Core inflation rate will be released at 8:30 am on 8/10. With commodity pricing declining, a declining print on both inflation rates could lead to further upside in the markets. Either way, I will continue to allocate $100 per week to the Dividend Harvesting portfolio and build out its income stream. The Dividend Harvesting portfolio generates weekly income, and every dividend is reinvested back into its original position. Currently, the Dividend Harvesting portfolio is up 1.06% ($79.47), it's projected to generate $533.42 in annual income and is yielding 7.04% across 78 positions. I have a broad investment mix that includes individual equities, exchange-traded funds (ETFs), closed-end funds (CEFs), and exchange-traded notes (ETNs).

In week 75, the $100 of allocated capital was invested in Ares Capital (ARCC), Intel Corporation (INTC), and the Global X S&P 500 Covered Call ETF (XYLD). These were current positions within the Dividend Harvesting portfolio where I felt there was an opportunity to increase my position. In week 75, the Dividend Harvesting portfolio produced $13.45 of income, bringing 2022's total income generated to $247.89 across 299 individual dividends. Ultimately, I would like this Portfolio to generate a minimum of 5-6% in annual income based on its portfolio value, not invested capital. I plan on continuing this series and allocating $100 per week to this project for years to come. This investment strategy isn't glamorous, and it won't appeal to everyone. Dividend investing can be tedious and sometimes feel like a slow grind. I am building this Portfolio out with 3 specific investment objectives in this order, 1st is to generate dividend income, 2nd is to mitigate downside risk during market declines, and 3rd is to generate capital appreciation. After 75 weeks, I feel this has been a success across the board.

portfolio

Steven Fiorillo

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.

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, $1000 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

progress

Steven Fiorillo

The Dividend Harvesting Portfolio Dividend Section

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

  • Equities $169.09 (31.70%)
  • ETFs $123.32 (23.12%)
  • REITs $105.85 (19.84%)
  • CEFs $100.72 (18.88%)
  • BDC $29.02 (5.44%)
  • ETNs $5.43 (1.02%)

Dividend

Steven Fiorillo

Dividend

Steven Fiorillo

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 $247.89 in dividend income from 299 dividends across 31 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-$500 in dividends in 2022, which will be reinvested, and finish the year generating >$700 in annual dividends.

Dividend

Steven Fiorillo

The never-ending stream of dividend income keeps flowing into my account through weekly dividends. After adding WBA and NNN to the Dividend Harvesting portfolio in week 73, there are 584 annual dividends being produced. Each week income comes rolling in, and the snowball effect amplifies little by little.

Dividend

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. There are now 6 positions that are generating at least 1 share annually through their dividends, which include Starwood Property Trust (STWD), PIMCO Corporate & Income Opportunity Fund (PTY), Broadmark Realty Capital (BRMK), AGNC Investment Corp. (AGNC), the Global X Russell 2000 Covered Call ETF (RYLD), and the Global X NASDAQ 100 Covered Call ETF (QYLD). I am trying to get more of the current positions over the finish line. Eventually, more positions will generate one share per year in dividend income.

Shares from Dividends Annually

0-9.9%

10-19.99%

20-29.99%

30-39.99%

40-49.99%

50-59.99%

60-69.99%

70-79.99%

80-89.99%

90-100%

Generating > 1 share

AMZA

C

XYLD

ORCC

ALTY

GLDI

ARCC

PDI

OHI

PTY

BBDC

MFC

IGR

INTC

PFFA

MPW

THW

T

ECC

QYLD

BP

FOF

NYCB

MO

VZ

BCAT

USA

BRMK

KHC

MLPX

KMI

SLVO

EXG

BST

RYLD

LGI

AQN

BTI

GSBD

STWD

JEPI

BDJ

PFFD

RITM

AGNC

AMLP

QYLG

NUSI

UTG

ENB

UTF

CWEN

SPG

SO

XOM

THQ

CCAP

OKE

DIVO

RQI

CSCO

XYLG

AY

WBA

NNN

STAG

ORI

VICI

O

ABBV

MMM

ED

MAIN

BMY

HPQ

GLW

KO

BAC

WBD

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 (WBA) 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.

Sectors

Steven Fiorillo

In week 75, REITs remained as the largest sector of the Dividend Harvesting portfolio with an 17.87% portfolio weight, while ETFs maintained 2nd place, accounting for 16.64%. Individual equities make up 45.67% of the portfolio and generate 31.70% of the dividend income, while ETFs, CEFs, REITs, BDCs, and ETNs represent 54.33% of the portfolio and generate 68.30% 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

$1,354.12

$7,579.47

17.87%

ETFs

$1,261.39

$7,579.47

16.64%

Closed End Funds

$1,108.67

$7,579.47

14.63%

Oil, Gas & Consumable Fuels

$567.62

$7,579.47

7.49%

Technology

$558.32

$7,579.47

7.37%

Communication Services

$541.10

$7,579.47

7.14%

Financials

$506.61

$7,579.47

6.68%

Consumer Staples

$462.85

$7,579.47

6.11%

BDC

$353.47

$7,579.47

4.66%

Utility

$306.23

$7,579.47

4.04%

Pharmaceuticals

$214.37

$7,579.47

2.83%

Industrials

$150.51

$7,579.47

1.99%

Independent Power & Renewable Electricity Producers

$115.07

$7,579.47

1.52%

Food & Staple Retailing

$38.99

$7,579.47

0.51%

ETN

$39.02

$7,579.47

0.51%

Cash

$1.14

$7,579.47

0.02%

REIT

Steven Fiorillo

ETF

Steven Fiorillo

CEF

Steven Fiorillo

oil

Steven Fiorillo

Financials

Steven Fiorillo

Communications

Steven Fiorillo

Staples

Steven Fiorillo

Tech

Steven Fiorillo

BDC

Steven Fiorillo

Utility

Steven Fiorillo

Pharma

Steven Fiorillo

Renewable

Steven Fiorillo

ETN

Steven Fiorillo

In week 75, Verizon (VZ) was neck and neck with INTC for the largest holding within the Dividend Harvesting portfolio. While I have a 5% rule, I would really like to get Omega Healthcare Investors (OHI) over the finish line in respect to generating an additional share annually through reinvesting its dividends. OHI is generating 80.42% of its current share price in dividends so adding a share or 2 could occur in the next several weeks.

Top 10

Steven Fiorillo

Week 75 Additions

In week 75 I added to my current positions of:

  • Ares Capital
  • Intel Corporation
  • Global X S&P 500 Covered-Call ETF

Ares Capital

  • On 8/1 I had an article published on why I was adding to ARCC (can be read here). ARCC had beat top and bottom line on their earnings estimates, but shares sold off after they announced an 8 million share public offering by roughly -3.58%. I took that opportunity to add the following Monday as ARCC has been a good steward of capital allocation in my opinion. ARCC is strictly an income investment for me, and ARCC generates income in spades. Its next ex-dividend date is 9/14/22 with a 9/30/22 payout date. ARCC's dividend track record is hard to replicate, and the special dividends are an added bonus on top of the 53 consecutive quarters of unchanged or growing dividends.

Intel Corporation

  • I also wrote an article published 8/3 about why I believe INTC is a good long-term investment (can be read here). INTC had a tremendous miss in Q2, and Q3 isn't looking promising. I read through the earnings report, the earnings call, the investor day report and did some other research. I needed to reassess my investment thesis. I determined that I would take management's word at face value and give them the benefit of the doubt. I am willing to add to INTC at close to a 4% yield and wait out the storm. I just don't see INTC vanishing into the night.

Global X S&P 500 Covered-Call ETF

  • XYLD has an 11.76% yield as it trades at $43.98 and pays a distribution of $5.17. I think the markets have a good chance to rebound in the 2nd half of 2022, which should benefit XYLD. I wanted to add to this position to increase the amount of income it generates and get closer to having it generate an additional share annually from its distributions.

Week 76 Gameplan

I have not made up my mind. Altria Group (MO) looks interesting to me as it rallied a bit off its lows. MO's yield is just above 8%, making it a strong consideration. I need to do some more research on MO.

Conclusion

The Dividend Harvesting portfolio continues to generate weekly income and mitigate downside risk no matter what the obstacles are. A new weekly positive streak is being formed. I couldn't be happier with this portfolio's progress and results as it delivers on my investment objectives. I am building a portfolio of income-producing assets I want to own and constructing a personalized ETF. Please leave all of your questions in the comment section and ideas for future investments. In week 80, I will be allocating the investment capital toward positions suggested by the readers of this series. Thank you for continuing to read this series, and I look forward to interacting with everyone in the comment section.

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
21.59K 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 XYLD, INTC, ARCC, OHI, STWD, MO, VZ 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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