Dividend Harvesting Portfolio Week 175: $17,500 Allocated, $1,566.24 In Projected Dividends

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Even though it was a short trading week over the July 4^th holiday, the markets kicked off the 2^nd half of 2024 with a bang. The S&P 500 increased by 1.69%, while the Nasdaq appreciated by 3.29%. There is no question that the bull market is alive, but if it remains well is another story. We’re headed into earnings season with the banking sector on deck and everything else to follow. With the Nasdaq up 33.07% over the past year and the S&P up 25.19%, I believe the future of the rally, at least in the short term, will live or die with the Magnificent Seven. The next several weeks will be interesting, as Tesla (TSLA) is expected to report on the 23^rd, while the rest of the Magnificent Seven will finish out July and run into August. Right in the middle of earnings season, the Fed will meet again, and CME Group is projecting that there is only a 6.7% chance that the first rate cut will occur. The future forecast is gearing up for a September rate cut, with only a 22.4% chance that rates will remain unchanged at the September FOMC meeting. I think that the Fed is making a big mistake sticking with the higher for longer mantra as the unemployment rate continues higher. The Fed has a dual mandate, and since 1948, every time unemployment has increased by 1%, we were either already in a recession or a recession immediately followed. I think we’re going to get a rate cut before the November election, but the real question is whether the Fed should hold out a little longer before taking the first step. Either way, I am a long-term investor, and I will be adding to the Dividend Harvesting Portfolio, no matter what happens. Ultimately, I think the market will be a little choppy heading into the middle of earnings season, and the combination of the Magnificent Seven and the FOMC meeting will have a lot to do with the future trajectory of the market.

The results from the Dividend Harvesting Portfolio won’t always be this bullish, but it continues to make new highs. For the first time, the account balance has exceeded $20,000, and it’s been 34 weeks since profitability was in the red. There has been $17,500 allocated toward the Dividend Harvesting Portfolio, and the official account value is $20,003.60, which is an ROI of $2,503.60 or 14.31%. Week 175 was one of the few weeks I added to the exact positions I intended on, as I added to Bristol Myers Squibb (BMY), and the Blackstone Secured Lending Fund (BXSL). I always go into the week with a plan, but there are so many positions I would like to increase my position in that it makes it hard to stick with my original ideas. July has started out strong, as I generated $44.41 in dividend income in the first week. The combination of adding to BMY and BXSL, in addition to reinvesting the dividend income from week 175, has increased my forward projected annualized dividend income by $13.42 (0.86%) to $1,566.24. There are roughly 8 weeks remaining until Labor Day, and at this pace, I think it’s entirely possible to end the summer generating at least $1,650 – $1,675 in forward projected dividend income. I am very excited to see how the remainder of 2024 progresses, and I will continue working on building out the Dividend Harvesting Portfolio. Based on the previous data, July should be a strong dividend income month, and there is a chance I will exceed $150 of generated income for the first time.

The overall performance of the Dividend Harvesting Portfolio

It’s easy to feel good about a portfolio when the market is at all-time highs, and that’s why I look at how the Dividend Harvesting Portfolio has performed during periods of adversity. We experienced a difficult market during 2022 as inflation scaled to the highest levels in 4 decades, interest rates continued higher, and geopolitical tensions flared. My investment goals in this account are to mitigate downside risk, and generate ongoing dividend income. Capital appreciation is a secondary goal, as my immediate goals are much more important for me. I don’t plan on ever touching this money, and in several decades when I retire, I am expecting this account to generate monthly income to supplement my lifestyle. These aren’t my only investments, and this account is one of the income-producing accounts I am building to reach my goal of not having to draw down on any of my other investments during retirement for normal living expenses. Everyone can look like a genius when the market is rallying, but it’s when the markets turn bearish when the true stability of an account is tested. No matter what happens on a macroeconomic level or geopolitical level in the future, I believe that the Dividend Harvesting Portfolio is diversified enough to deliver on my two main investment goals.

The Dividend Harvesting Portfolio dividend section

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

• Equities $446.81 (28.53%)
• ETFs $371.68 (23.73%)
• REITs $286.71 (18.31%)
• CEFs $273.65 (17.47%)
• BDCs $177.48 (11.33%)
• Treasuries $9.89 (0.63%)

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 27 weeks in 2024, I have collected $735.33 from 371 dividends. This is 75.33% of the total dividend income generated in 2023 from 56.21% of the dividends produced.

In week 27 I collected $44.41 in dividend income, which brought my weekly average in 2024 to $27.23. This is a 61% increase YoY from the 2023 weekly dividend average of $16.92 that the Dividend Harvesting Portfolio generated. One of the most exciting things about this portfolio is that the dividend income continues to roll in each and every week, no matter what I decide to do. As this portfolio gets built out, I believe that the powers of compounding interest will really start to intensify. I am interested in seeing how many weeks at least $50 of dividend income will be generated, and if $100 gets generated in a single week during 2024.

More than 50% of the total amount of dividend income in July 2023 was generated this week. Based on previous history, the first month of each quarter has been the strongest month for the generation of dividend income. I think it’s safe to say that at least $100 will be generated each month going forward unless a bunch of companies and funds reduce their dividend payments. I’m excited to see how the chart below progresses because in previous years, the dividend income generated trended up and to the right over time. I am planning on allocating capital at the same pace and think that I will break $150 of monthly dividend income in either July or October 2024, and we could see a week that exceeds $100 of generated income.

In week 175 the BlackRock Capital Allocation Term Trust (BCAT) fell out of the green section in the chart below, which represents all the positions that are generating at least 1 share from their dividend income annually. There are now 33 positions generating at least 1 share, and after the dividends are reinvested, they add roughly $116.43 in forward dividend income to the Dividend Harvesting Portfolio. I have a bunch of work to do, and I have been trying to move more positions into the green section. After looking at the chart, I think I can get a few positions crossed over before the end of the summer.

The Dividend Harvesting Portfolio composition

I am enjoying the fact that none of the sectors within the Dividend Harvesting Portfolio are exceeding 20%. The drop in REITs is making it easier for me to justify adding to some positions before the Fed eventually moves forward with a rate cut. I am trying to even out these percentages a bit more, and I believe it will come with time. I am trying to add to individual equities as much as possible, but there are so many opportunities that it makes it hard to direct all my capital away from ETFs and CEFs.

Individual equities now represent 38.60% of the Dividend Harvesting portfolio while generating 28.53% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 61.40% of the portfolio and generate 71.47% of the forward income. I am working on getting individual equities to represent more of the portfolio, and looking at the pie charts below, Pharmaceuticals continues to inch its way higher, and over time, I want to get some of these other segments to represent a larger proportion of the overall investment mix.

In week 175 nothing changed in the top-10 positions. Altria Group (MO) is still over 4.5% of the portfolio and is the only position exceeding 5%. I find it interesting that I haven’t added to Verizon (VZ) in a long time, yet it’s still my 2^nd largest position. Over the next several months, I think the list will change a great deal, and I am putting all of the information together for positions 11-20, so I can show more data for the larger positions within the Dividend Harvesting Portfolio.

The JPMorgan Equity Premium Income ETF (JEPI) and JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) both generated their distributions this week. While all of the positions remained the same in the top-10, the underlying data slightly changed. My allocation to the top-10 positions is $5,340.20, and they finished the week with a value of $6,302.23. This is an ROI of $962.03 (18.01%). There have been $626.58 of dividends generated and reinvested, which is 11.73% of the initial investment into these positions. I am now projecting that $491.37 of dividend income will be generated from the top 10 holdings, which have a forward yield of 9.20%. These positions represent 31.51% of the portfolio, while their forward dividend income is projected to generate 31.37% of the Dividend Harvesting Portfolio’s annualized income.

Week 175 Additions

In week 175, I added to Bristol-Myers Squibb, and the Blackstone Secured Lending Fund.

Bristol-Myers Squibb

• I am shocked that BMY finished at 52-week lows, as it closed the week at $39.66. I think that the market is unfairly punishing BMY and that I will be rewarded in the end for catching this falling knife.
• BMY has made several acquisitions that should rejuvenate its future pipeline of products and solidify its profitability.
• BMY is now yielding 6.05%, and they are committed to the dividend, which has been increased for the past 7 years.
• If BMY continues to fall, I will probably add to my position at a quicker pace unless something in my investment case changes

Blackstone Secured Lending Fund

• BXSL has been doing well as it’s up 16.47% on the year and yielding 9.47%
• BXSL is the latest BDC that I have added to the Dividend Harvesting Portfolio, and I am excited as they have significantly grown their NII And dividend over the years.
• I am particular fond of BXSL’s loan book, as it’s primarily comprised of first-lien senior secured debt
• I think the rate environment will continue to play into BXSL’s favor as the restrictive environment has allowed BXSL to add loans at favorable rates to their portfolio

Week 176 Game Plan

I feel like week 176 is going to replicate week 174 as I am considering adding to Realty Income (O) and the Neos S&P 500(R) High Income ETF (SPYI) again.

Conclusion

The Dividend Harvesting Portfolio is at all-time highs, and the amount of income generated continues to increase. I am rapidly approaching $1,600 of forward dividend income, and my average monthly projected income is roughly $130.52. I believe the market is headed higher, and when the Fed cuts rates, many of the positions within the portfolio will start to rebound. If, for some reason, we get a higher for longer rate environment or the Magnificent Seven underwhelm the market this earnings season, the level of diversification should allow the Dividend Harvesting Portfolio to ride out any headwinds that could be in our path. I look forward to interacting with everyone in the comment section, so please leave all of your ideas below.