Dividend Harvesting Portfolio Week 166: $16,600 Allocated, $1,490.16 In Projected Dividends

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Amazon and Apple reported earnings, while the Fed Chair stated that a rate cut is likely unless there are significant changes.The market interpreted a softer non-farm payroll report as a sign of a ...

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PM Images This was an interesting week as Amazon (AMZN) and Apple (AAPL) were the latest big tech companies to report earnings, rates remained unchanged at the FOMC meeting, Fed Chair Powell delivered a dovish press conference, and the labor report came in softer than expected. The Fed hasn't pivoted yet, as Chair Powell stated that the Fed needs to see more data that inflation isn't going to continue upward before they start the cutting process. What Fed Chair Powell said gave the market some clarity: a move higher in rates would be unlikely, and the next move the Fed would make would be a cut unless something drastically changes. After a softer non-farm payroll report where the U.S. added 175,000 jobs when the consensus number was 243,000, it looks like the market is interpreting that this could mean the economy is slowing and that the Fed will look at this data favorably. The S&P 500 was falling into the Fed meeting as it stated the week at 5,119.85 and reached 5,014.74 prior to the FOMC meeting, but finished the week up 0.15% as it closed at 5,127.79. The Nasdaq had a similar arc in the week, as it started the week on the decline but finished up 0.91%. I think the macroeconomic environment is setting up well for the market, and unless something changes, the Fed will cut rates by 25 bps at the July meeting to test the waters. If they hold rates where they are and have the first-rate cut come in September, it would look too political, and Fed Chair Powell was very specific when asked at the FOMC Q&A session that the Fed is an independent body and politics doesn't play a role in their decision-making. Based on the data I am looking at, especially the commodity markets where crude has fallen under $80 per barrel, I think that we will see CPI start to cool again over the next several months, and if that occurs, then the Fed should have the data they need to start taking rates lower. I am excited for the remainder of 2024 as I think the Dividend Harvesting Portfolio will do well, especially with all the investments that were made while the markets fell in 2022. There is a lot to discuss this week. I made the decision to exit my position in Leggett & Platt, Incorporated (LEG). LEG was a Dividend King with more than 50 years of increasing their dividend payments, but slashed the dividend so they could reallocate capital toward their debt. The dividend was reduced by 89%, and after shares rebounded a bit, I exited my position. 3M Company (MMM) is expected to resize its dividend after the spinoff, and I am waiting to see what the new dividend will be prior to deciding on if I will exit MMM also, but I am leading keeping it part of the Dividend Harvesting Portfolio as they could continue to provide future increases. It was a good week in the market, and the Dividend Harvesting Portfolio increased by $235.76, excluding the $100 of allocated weekly capital. After allocating $16,600 over the previous 166 weeks, the current value of the Dividend Harvesting Portfolio is $18,508.83, up $1,908.83 on invested capital. In week 166, the largest amount of weekly dividend income was generated, as $83.49 flowed into the account. I ended up changing my mind this week, and after Starbucks (SBUX) fell almost -15% on the week, I dollar cost averaged into my position and reduced my price per share by roughly $10. I also added another share of the NEOS NASDAQ-100(R) High Income ETF (QQQI) as I used some of the capital from selling the 2 shares of LEG I held. The combination of these purchases and reinvesting the dividend income that was generated increased my forward projected dividend income by $11.45 (0.77%) to $1,490.16. Things are going well, and I am expecting to exceed $1,500 of forward dividend income over the next several weeks. It's going to be interesting to see how the Dividend Harvesting Portfolio does in the back half of 2024.   Steven Fiorillo, Seeking Alpha The overall performance of the Dividend Harvesting Portfolio I was disappointed that LEG's dividend was slashed by 89%, but their management team felt the best use of capital was to pay down its debt. This is why I am overly diversified: because the large reduction in the dividend didn't impact the Dividend Harvesting Portfolio's income production, and the loss barely left a mark. By making sure that no single position represents more than 5% of the portfolio, I can mitigate my downside well. I am never going to get every investment right, and the best thing I can do is construct my portfolio so it can absorb unforeseen headwinds. The reason I sold LEG after it rebounded slightly rather than waiting it out the way I am doing with New York Community Bancorp (NYCB) is because it was a small position, and I don't feel it's worth it to keep it in the portfolio. I think that NYCB is a turnaround story at this point, and I will recoup the money I am down, and the dividend could be brought back in the next year or two. If NYCB gets back to where I am, even if the dividend is still at its current level, I will revisit it and probably exit the position. Despite LEG and SBUX sharply declining this week, the overall portfolio continues to climb higher as its diversification is allowing me to participate in many of the sectors that are climbing. This week is another example of how my main goals of mitigating downside risk and generating recurring income are being met.   Steven Fiorillo, Seeking Alpha The Dividend Harvesting Portfolio dividend section Here's how much dividend income is generated per investment basket:  Equities $425.85 (28.58%) ETFs $353.61 (23.73%) REITs $280.70 (18.84%) CEFs $261.32 (17.54%) BDCs $158.92 (10.66%) Treasuries $9.76 (0.65%)    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 18 weeks in 2024, I have collected $495.66 from 245 dividends. This is 50.78% of the total dividend income generated in 2023 from 37.12% 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 This week was an incredibly strong week for income production as $83.49 flowed into the Dividend Harvesting Portfolio from its dividends. My 2 largest positions, Altria Group (MO) and Verizon (VZ), both paid their dividends this week, which was a big benefit. MO generated $19.34 of dividend income, and I was able to purchase 0.4405 shares, while VZ produced $11.68 of dividend income and purchased 0.2957 shares. The main question heading into this week is whether $100 of dividend income for April has been answered, as it was a blowout. In April, $142.46 of dividend income was generated, which set a new monthly record for the Dividend Harvesting Portfolio. I have decided to do something different, and since week 166 was spread across the end of April and the beginning of May, I will be keeping a running tally in the graph below regarding the amount of income generated in the current month. After several days, $36.77 of income was generated in the month of May, and I have a feeling that generating double-digit income over the course of a month is a thing of the past. Now, the next milestone will be to generate $100 of income in a single week and try to replicate it several times throughout the year.   Steven Fiorillo, Seeking Alpha Getting more positions to cross over into the green section of the chart below isn't going to be easy, but I will continue to work on it. An ongoing goal is to get as many positions as possible to generate at least 1 share annually from their dividend income. Currently, there are 33 positions generating at least 1 share from their dividends, and the new shares they produce throughout the year is expected to add $103.93 of forward dividend income to the portfolio. As the market climbs higher, I am expecting some of the positions that are currently in the green to fall back into the 90% - 100% column, and I will need to add to those positions. This is a work in progress that feels like a never-ending battle, but I will continue until my goals are met.   Steven Fiorillo, Seeking Alpha The Dividend Harvesting Portfolio Composition   Steven Fiorillo, Seeking Alpha It's not easy staying under 20% in a particular sector when you believe in the long-term viability of the investments. I am still building out many positions, so keeping REITs and ETFs under my 20% threshold hasn't been an easy task. In the short-term, I could see these fluctuating to 22% or so, but when I look at the longer-term vision, I think it will be quite easy to keep all of these sectors under my 20% goal. There are many investments I plan on adding to, and I think the pie chart above will start to even out a bit next year. Individual equities now represent 37.82% of the Dividend Harvesting portfolio while generating 28.58% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 62.18% of the portfolio and generate 71.42% 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 In week 166, Simon Property Group (SPG) fell off the top ten list, while the BlackRock Science and Technology Trust (BST) reclaimed the 10th spot. Altria Group continues to overshadow the rest of the positions, as I added to the position when it traded between $40 and $41, and shares got a boost after reporting their Q1 earnings. I think we will see some changes in the coming months to the top-10 list, and I will work on gathering the data for the next 10 positions. I think I am also going to start tracking positions 11-20 in the future.   Steven Fiorillo, Seeking Alpha The BlackRock Science and Technology Trust entered the top-10 while paying its dividend in addition to Altria Group, and Verizon also generating their dividends this week. The metrics have slightly changed in the chart below, but I wanted to highlight Altria Group for a moment. I have purchased 18 shares of Altria Group for $801.72 since I started this portfolio. They have generated $97.23 in dividend income, which is 12.13% of my initial investment, and generated 2.17 new shares. As I continue this process, more positions will look like this, and I think the increase in my forward dividend over the next several years is going to be surprising. In total, the top-10 positions have cost me $5,253.27 and are now valued at $5,996.72, which is a return of 14.15%. These positions are expected to generate $481.42 of forward dividend income, which is a 9.16% yield. These positions represent 32.40% of the portfolio, while their forward dividend income is projected to generate 32.31% of the Dividend Harvesting Portfolio's annualized income.   Steven Fiorillo, Seeking Alpha Week 166 Additions In week 166 I added to my positions in:  Starbucks NEOS NASDAQ-100(R) High Income ETF  Starbucks  I had originally started my position in Starbucks when shares were trading at $92.10 as I felt it was a good entry point. I was wrong as shares tanked after missing on the top and bottom line when their Q1 earnings were delivered. I added another share at $73.70 and educed my cost basis to $82.90 which was a -9.99% decline. It's too early to tell if the bleeding has stopped, but Starbucks is trading around its 2022 lows and there is major support around $71. The dividend yield has now exceeded 3% and Starbucks has grown the dividend for 13 consecutive years. I like the coffee business and think there is an opportunity for Starbucks to expand into new markets. I would be interested in adding more to my position at these levels and will probably increase my exposure to Starbucks over the next several weeks.  NEOS NASDAQ-100(R) High Income ETF  I have been adding to QQQI lately as I am fond of its option overlay strategy So far, QQQI has paid 3 distributions totaling $1.79 and is on pace to generate $7.14 of income per share. I think that the Nasdaq 100 will do well in the back half of 2024 after going through big techs earnings and if I am correct then QQQI should follow the market higher while generating double-digit yields I plan on adding to QQQI below $55 and trying to get it to produce 1 share per year from its dividends  Week 167 Gameplan Due to Starbucks dramatic sell-off, I didn't get an opportunity to purchase additional shares of Pfizer (PFE) last week. I will probably add to my position in PFE and maybe Realty Income (O) or Cisco Systems (CSCO). Conclusion This week was a prime example of how the Dividend Harvesting Portfolio is able to achieve its investment objectives. Shares of LEG crashed as the dividend was slashed, while Starbucks declined by more than -10%, and the Dividend Harvesting Portfolio was able to absorb the blows. In fact, the overall portfolio value was able to increase by $235.76, excluding the $100 weekly capital allocation. The portfolio is able to mitigate downside risk while generating an 8.05% yield, which exceeds the risk-free rate of return and produces weekly recurring income. The forward projected dividend income is $1,490.16; on average, I should generate roughly $124.18 in monthly dividend income. This style of investing isn't for everyone, as income-producing assets aren't a priority for some investors, but if there is one takeaway, I want to highlight it is continuous investing. Please leave all your comments and suggestions 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":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"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":"4.24.2","shortVersion":"4.24.2","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/2434836097"}