Dividend Harvesting Portfolio Week 162: $16,200 Allocated, $1,450.45 In Projected Dividends

seekingalpha04-11

Minneapolis Federal Reserve Bank President's comments spooked markets, but they rebounded by the end of the week.The Dividend Harvesting Portfolio had a down week, but is still up 11.57% on invested ...

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PM Images Well, Minneapolis Federal Reserve Bank President Neel Kashkari spooked the markets on Thursday, indicating that rate cuts may not occur in 2024 if inflation doesn't continue to fall. The investment community must have realized that Mr. Kashkari isn't a voting member of the Fed because the market rebounded on Friday to close out the week with the S&P 500 up 1.11%. Ultimately, the markets did finish in the red for the week as the S&P 500 declined by -1.09% while the Nasdaq fell -1.30%. All eyes will be on the upcoming CPI print on Wednesday, April 10th, while I am sure many will be scouring through the release of the FOMC minutes. The February CPI print came in at 3.2%, and the consensus estimate for March is 3.4%. Core CPI, on the other hand, came in at 3.8% and is expected to decline to 3.7% when the March report hits the wire. I am not discounting what Mr. Kashkari said, but I am waiting to form an opinion based on the CPI prints and what Raphael Bostic and Mary Daly say in their speeches this week. Ultimately, as a long-term investor, I am able to roll with the punches, and if the market gets spooked, I will happily buy the dip. I do think we're going to see cuts this year as there is too much debt maturing over the next year that needs to be refinanced, and the last thing the Fed wants is for the regional banking system to become strained again. Over the past 162 weeks, I have allocated $16,200 to the Dividend Harvesting Portfolio. After 7 consecutive weeks of watching the value appreciate, the Dividend Harvesting Portfolio had a down week, finishing with a balance of $18,074.86. The portfolio is still well into the black as it's up $1,874.86 or 11.57% on invested capital. This was a big week for dividend income as 3M Company (MMM) spun off Solventum Corp. (SOLV). My 3.2 shares of MMM generated $52.28 in cash, as I needed to have 4 shares to get 1 share of SOLV. I do not count this as traditional dividend income as it was a spinoff, but I did reinvest most of the income that was generated from the spinoff in week 162. There was $54.04 of traditional dividend income generated in week 162, which was a solid start to the month of April. Once again, I added to my British American Tobacco (BTI) position and increased my holdings in the Reaves Utility Income Trust (UTG). The combination of adding to these positions while reinvesting the $54.04 of dividend income that was produced increased the Dividend Harvesting Portfolio's forward projected income by $19.96 (1.40%) to $1,450.45. I wasn't expecting the beginning of April to be so heavy with dividend income, and I have a good feeling about generating at least $100 of income throughout the month, as there are still 3 ½ weeks left.   Steven Fiorillo, Seeking Alpha The overall performance of the Dividend Harvesting Portfolio After 7 consecutive weeks where the Dividend Harvesting Portfolio continued higher, the portfolio value slipped in week 162. The total value of the portfolio declined by -$230.41 to $18,074.86. I am very pleased with the results as the Dividend Harvesting Portfolio is in the black by $1,874.86 or 11.57%. All eyes will be on the CPI print this week and the upcoming Fed meeting in several weeks. I am not trying to beat the market, as this portfolio focuses on generating continuous income from a diversified portfolio mix. I think that many of the underlying holdings will do well in a lower rate environment, and if the CPI print runs hot, I fully expect a selloff that will impact my account value. Regardless of what occurs, I will be adding to the portfolio each week, and if we get a selloff, I may add to several REIT positions.   Steven Fiorillo, Seeking Alpha The Dividend Harvesting Portfolio dividend section Here's how much dividend income is generated per investment basket:  Equities $416.08 (28.69%) ETFs $336 (23.16%) REITs $271.77 (18.74%) CEFs $259.05 (17.86%) BDCs $157.78 (10.88%) Treasuries $9.76 (0.67%)    Steven Fiorillo, Seeking Alpha  Steven Fiorillo, Seeking Alpha Collecting dividends can serve many functions in a portfolio. Some investors utilize dividends to supplement their income and live off of them. I'm building a dividend portfolio for myself 30 years into the future. In 2022, I collected $507.80 in dividend income from 533 dividends. In 2023, I collected $978.11 in dividend income from 660 dividends. After the first 14 weeks in 2024, I have collected $370.47 from 193 dividends. This is 37.95% of the total dividend income generated in 2023 from 29.24% of the dividends produced. 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. The Dividend Harvesting Portfolio finished strong in 2023, and I am looking to generate $1,800 of dividend income in 2024 while getting to the point where I never dip below $100 of monthly dividend income being generated.   Steven Fiorillo, Seeking Alpha  Steven Fiorillo, Seeking Alpha I am still disappointed with not generating $100 of monthly dividend income in March, but hopefully, that's the last time it happens. The first week of April started with a bang as $54.04 of dividend income was generated. I am interested in seeing how much dividend income is generated this week, as I don't feel that reaching $100 in April will be a problem. There are 3 ½ weeks left in April, and having already generated more than 50% of my goal in the first week helps a lot. I do think we're going to see the $100 level generated each month going forward.   Steven Fiorillo, Seeking Alpha I have added quite a bit of BTI over the past several weeks, and it's now generating between 90-100% of its share price from its dividends. There are 31 positions that are generating at least 1 share on an annual basis from their dividends. Those additional shares are projected to generate an additional $103.25 of forward annualized income. As the months progress, I plan on getting several new positions to cross over into the green section of the chart below. Eventually, I want every position to generate at least one new share from their annual dividends, although I have no idea how long that will take. I will be happy if I can move another 10-15 positions into the green by the time 2024 is over.   Steven Fiorillo, Seeking Alpha The Dividend Harvesting Portfolio Composition   Steven Fiorillo, Seeking Alpha It's been a while since this has occurred, but REITs are no longer the largest sector in the Dividend Harvesting Portfolio. ETFs now represent 19.18%, while REITs are down to 19.11%. I have been trying to focus on individual equities rather than adding to REITs and ETFs. While my threshold is to try and stay under a 20% allocation to a specific investment basket, sometimes it's difficult. I am working on trying to get these sections to even out, but I think they will remain lopsided for some time. Hopefully, over the next several months, I can continue to diversify into other sections of the Dividend Harvesting Portfolio. Individual equities now represent 37.82% of the Dividend Harvesting portfolio while generating 28.69% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 62.18% of the portfolio and generate 71.31% of the forward income. I plan on adding to every asset class within the Dividend Harvesting Portfolio throughout 2024, but in the early stages, I will try to divert capital away from REITs in the short term.   Steven Fiorillo, Seeking Alpha  Steven Fiorillo, Seeking Alpha  Steven Fiorillo, Seeking Alpha There was some movement in the middle and at the bottom of the top 10 holdings, but all of the same names are still on the list. Altria Group (MO) remains the largest holding, but its overall portfolio weighting continues to decline. Verizon (VZ) is getting closer, representing less than 4% of the portfolio, while the remaining positions continue to level off. While I have a 5% maximum weighting, I am trying not to add to VZ or MO again until they are under 4% of the portfolio. I would also like to see some other names on the list and believe that the bottom half will change by the end of 2024.   Steven Fiorillo, Seeking Alpha Several positions within the top 10 holdings, including Simon Property Group (SPG), Ares Capital (ARCC), JPMorgan Equity Premium Income ETF (JEPI), and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) all paid their dividends this week. The allocated capital across the group is still $5,121.38. I have collected $533.36 in dividend income from these positions, which is 10.41% of the original investment. The current value of the top 10 holdings is $5,990.42, which is a profit of $869.04. These positions are projected to generate $473.76 in forward dividend income, which is a 9.25% yield. The top 10 positions collectively represent 33.14% of the Dividend Harvesting Portfolio, while their forward dividend income is projected to generate 32.66% of the forward dividend income.   Steven Fiorillo, Seeking Alpha Week 162 Additions In week 162, I added to my positions in:  British American Tobacco (BTI) Reaves Utility Income Trust (UTG)  British American Tobacco  On April 3rd I had written an article on BTI (can be read here) which outlines my full investment thesis on the position BTI operates in a hated industry, but its profitability and margins are very enticing. BTI has a gross profit margin of 82.63% which is unheard of outside of SaaS companies. In 2023 BTI generated $14.96 billion in EBITDA, which is a margin of 44.75% while its FCF came in at $11.93 billion for a margin of 35.69% BTI has strong financials and trades at 6.44 times 2024 earnings and 5.8 times 2026 earnings BTI has a dividend yield of around 9.6% and is planning on implementing a buyback plan I think BTI is an unloved and undervalued company and even though the narrative isn't optimal, I plan on adding to my position  Reaves Utility Income Trust  On April 2nd I wrote an article that discussed my investment thesis on UTG (can be read here) UTG focuses on utilities and I feel that the fund's underlying holdings will benefit from capital moving back into the market when the Fed pivots as investors will look to replicate the income they were generating from risk-free investments UTG's monthly distribution continues to increase and has established a track record that spans 2 decades for generating income for its investors I plan on adding to the position as I want more exposure to utilities going into 2025  Week 162 Game Plan Next week, I will probably add to BTI again, so it will be generating at least 1 share on an annual basis from its dividends. I am also looking at Pfizer (PFE), as I feel this is another undervalued position with a strong dividend. Conclusion  The forward dividend income jumped a bit as I was able to invest a bit more this week due to the MMM spinoff. When the portfolio just started out, there were many comments questioning why I would do this, especially in the early articles. A common criticism was that I was only generating $30 of forward dividend income. Everybody must start somewhere, and not everybody has a large amount of seed capital to deploy at the beginning of their investing journey. While this portfolio doesn't represent all my investments and is a very small percentage of my invested capital, I wanted to document what is possible by starting a dividend portfolio from the ground up and staying consistent with the allocated capital. Today, the Dividend Harvesting Portfolio is worth $18,074.86, which is a profit of $1,874.86, has 95 positions, and is expected to generate $1,450.45 in annualized forward dividend income. Pretty soon, that number will increase to $2,000 and eventually $12,000, which will generate $1,000 per month. This strategy can be applied to any type of investment, and this is not a replacement for index funds by any means. I am a hybrid investor, and part of my allocated capital goes to generating income. I plan on generating enough income to fund my retirement without having to touch my other investments. I am excited to see what the future holds and what the charts below will look like in the coming years. Thanks for reading, and please leave all of your comments below, as I try to interact with everyone in the comment section.    Steven Fiorillo, Seeking Alpha  Steven Fiorillo, Seeking Alpha","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2426252800"}