Dividend Harvesting Week 81 Update: $8,100 Allocated, $589.69 In Annual Dividends Yielding 7.59% Across 79 Positions

Sep. 22, 2022 9:00 AM ETBST, IGR, JEPI, MPW, QYLD, SCHD, STOR, VZ26 Comments

Summary

  • After 81 weeks and $8,100 allocated, the Dividend Harvesting portfolio is generating $589.69 in annual dividend income.
  • The Dividend Harvesting portfolio has an 86.42% record of finishing the week in the black since its inception, 70/81 weeks.
  • In week 81, I sold my position in STOR and added to the following positions, VZ, BST, QYLD, IGR, VZ, and MPW.
  • 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 »

Dollar currency growth concept with upward arrows on charts and coins background

gesrey

The S&P 500’s rally has once again been short-lived as its 3.65% gain the week of 9/5 was erased by a -5.35% decline in the week of 9/12. The majority of selling came after a hotter CPI print, and the focus has now shifted to this week’s Federal Reserve (Fed) policy meeting as a decision on interest rate increases will be announced on Wednesday, 9/21. The Dividend Harvesting Portfolio was grinding its way back to even, but the abrupt sell-off pushed it to finish the week -4.09% (-$330.92) in the red. The Dividend Harvesting Portfolio has finished 86.42% (70/81) of the weeks in the black, and the majority of its negative weeks have occurred in the past several months.

In week 81, I sold my first position in this portfolio. In week 80, I added STORE Capital Corp (STOR). I purchased 2 shares for $54.76 ($27.38 per share), and news broke that STOR would be taken private for $32.25 per share this week. I sold both shares of STOR for $64.56 as shares were slightly above $32.25 for a gain of $9.80 (17.90%). I redeployed this capital into Verizon (VZ), Medical Properties Trust (MPW), and CBRE Global Real Estate Income Fund (IGR). My initial purchases with the traditional $100 of allocated capital were used to add an additional share of JPMorgan Equity Premium Income ETF (JEPI), BlackRock Science and Technology Trust (BST), Global X NASDAQ 100 Covered Call ETF (QYLD), and IGR.

At the close of week 81, The Dividend Harvesting Portfolio generated $8.39 in dividend income, placing 2022’s total dividend income produced at $306.36. There have been a total of 363 dividends generated in 2022, and dividend income is working its way into the portfolio every week. The Dividend Harvesting Portfolio is generating $589.69 in projected annual income, and its portfolio yield is 7.59% across 79 positions. While the portfolio is slightly in the red, I see this as a phenomenal opportunity to add to current positions that I believe are oversold, such as VZ. I am excited to see where this portfolio is this time next year, as earnings are projected to increase for many of the S&P’s largest holdings. For the time being, I will be sifting through the rubble and adding to what I believe are diamonds in the rough as the market continues to reside on bear market drive.

Portfolio

Steven Fiorillo, Seeking Alpha

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

Portfolio

Steven Fiorillo, Seeking Alpha

The Dividend Harvesting Portfolio Dividend Section

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

  • Equities $184.26 (31.25%)
  • ETFs $132.28 (22.43%)
  • CEFs $118.26 (20.05%)
  • REITs $111.24 (18.86%)
  • BDC $38.19 (6.48%)
  • ETNs $5.46 (1%)

Dividend

Steven Fiorillo, Seeking Alpha

Dividend

Steven Fiorillo, Seeking Alpha

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 $306.36 in dividend income from 363 dividends across 37 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.

Dividends

Steven Fiorillo, Seeking Alpha

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.

Dividends

Steven Fiorillo, Seeking Alpha

There is a first time for everything, and the total dividend count just decreased in week 81 from 592 dividends produced annually to 588 as I exited the position in STOR.

Dividends

Steven Fiorillo, Seeking Alpha

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 9 total positions generating at least 100% of their share value in dividends within the Dividend Harvesting portfolio. By adding to ARCC and USA, these have become the newest addition to positions generating at least 1 share annually through their dividend income.

Dividends

Steven Fiorillo, Seeking Alpha

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.

Portfolio

Steven Fiorillo, Seeking Alpha

In week 81, REITs remained as the largest sector of the Dividend Harvesting portfolio. REITs had a 17.3% portfolio weight, while ETFs maintained 2nd place, accounting for 16.5%. Individual equities make up 44.88% of the portfolio and generate 31.25% of the dividend income, while ETFs, CEFs, REITs, BDCs, and ETNs represent 55.12% of the portfolio and generate 68.75% 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

$1,339.83

$7,769.08

17.25%

ETFs

$1,282.55

$7,769.08

16.51%

Closed End Funds

$1,177.28

$7,769.08

15.15%

Oil, Gas & Consumable Fuels

$591.03

$7,769.08

7.61%

Communication Services

$536.63

$7,769.08

6.91%

Consumer Staples

$532.23

$7,769.08

6.85%

Technology

$515.64

$7,769.08

6.64%

Financials

$514.25

$7,769.08

6.62%

BDC

$437.25

$7,769.08

5.63%

Utility

$305.88

$7,769.08

3.94%

Pharmaceuticals

$221.33

$7,769.08

2.85%

Industrials

$119.06

$7,769.08

1.53%

Independent Power & Renewable Electricity Producers

$116.31

$7,769.08

1.50%

ETN

$37.33

$7,769.08

0.48%

Food & Staple Retailing

$34.72

$7,769.08

0.45%

Cash

$6.39

$7,769.08

0.08%

REIT

Steven Fiorillo, Seeking Alpha

ETF

Steven Fiorillo, Seeking Alpha

CEF

Steven Fiorillo, Seeking Alpha

Oil

Steven Fiorillo, Seeking Alpha

Banks

Steven Fiorillo, Seeking Alpha

Communications

Steven Fiorillo, Seeking Alpha

Staples

Steven Fiorillo, Seeking Alpha

Tech

Steven Fiorillo, Seeking Alpha

BDC

Steven Fiorillo, Seeking Alpha

Utility

Steven Fiorillo, Seeking Alpha

Pharma

Steven Fiorillo, Seeking Alpha

Renewable

Steven Fiorillo, Seeking Alpha

ETN

Steven Fiorillo, Seeking Alpha

In week 81 VZ reclaimed being my largest position in the Dividend Harvesting Portfolio, knocking INTC down a few spots. VZ is now the only position that exceeds a 4% portfolio weighting and I will be keeping my eye on it to make sure it doesn’t get past 5%.

Top 10

Steven Fiorillo, Seeking Alpha

Week 81 Additions

In week 81 I allocated the usual $100 to the Dividend Harvesting Portfolio, and sold my position in STOR which generated $64.56 in additional capital.

I added to the following positions initially with the $100 of weekly capital:

  • JPMorgan Equity Premium Income ETF
  • BlackRock Science and Technology Trust
  • Global X NASDAQ 100 Covered-Call ETF
  • CBRE Global Real Estate Income Fund

With the proceeds from selling STOR I added to the following positions:

  • Verizon
  • Medical Properties Trust
  • CBRE Global Real Estate Income Fund

JPMorgan Equity Premium Income ETF

  • Several readers suggested that I add to JEPI in week 80, but I decided to add 2 additional REITs. I followed through on their suggestions in week 81 and added to JEPI. This is a covered-call income fund from JPMorgan Chase (JPM) that was in the red a bit. It’s yield has been pushed past 10% and I decided to dollar cost average into the position

BlackRock Science and Technology Trust

  • BST is having an awful year as tech and biotech have been extremely volatile as the bear market rages on. BST’s yield is now 9.19%, and I decided to dollar cost average. I think BST is going to outperform when the market turns, and sometime next year, BST will be in the green. Until then I will reinvest the dividends and add shares when opportunities present themselves

Global X Nasdaq 100 Covered-Call

  • Readers of this series probably could have guessed that QYLD would be added. It’s hard to pass up on QYLD at around $17 as the yield had exceeded 15%. The Nasdaq has been slammed, and QYLD has followed. I will continue adding to this position within the Dividend Harvesting Portfolio, and my regular dividend portfolio

CBRE Global Real Estate Income Fund

  • With REITs underperforming, I decided to add another share of IGR. IGR trades at around $7 and is a Closed-End Fund managed by CBRE, which is the largest global real estate firm. Many of the REITs I own can be found within the fund, and it provides global exposure to REITs I wouldn’t be aware of. This is a fund I will continue to add to regardless of what the market does, as I want to increase my exposure to real estate directly through specific REITs, and indirectly through ETFs and CEFs.

Verizon

  • It's hard for me to pass up on VZ when its yield is past 6%. This is a company that has provided 17 years of consecutive dividend increases and provides a product that has become critical to everyday life. I am looking past the short-term issues as this is a great cornerstone to any dividend portfolio in my opinion.

Medical Properties Trust

  • MPW continues to decline, and I cannot wait until earnings. There hasn’t been negative news, and the selloff is unwarranted in my opinion. MPW has one of the most attractive valuations from all the REITs I track, and it reminds me of how Omega Healthcare Traded for an extended period of time. With an 8.41% yield, I will continue to add to my position in MPW.

Week 82 Gameplan

I am unsure if I will allocate the capital prior or after the Fed meeting. I am leaning toward after because I want to see how the market reacts to the next rate hike. I am considering adding a share of INTC and maybe starting a position in the Schwab U.S. Dividend Equity ETF (SCHD).

Conclusion

I am getting ready for more volatility as the Fed meeting is this week, and the midterms are around the corner. I like buying when the market is down because I have a long-term time horizon, allowing me to purchase quality companies on sale. There are many opportunities, and I look forward to adding to this portfolio each week. I am looking forward to seeing how the Dividend Harvesting Portfolio ends the year and what it looks like throughout 2023.

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
22.42K 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 VZ, IGR, MPW, JEPI, QYLD, SCHD 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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