Dividend Harvesting Portfolio Week 105: $10,500 Allocated, $813.94 In Projected Dividends

As Nick Maggiulli would say, "just keep buying." Regardless of what the market does, every two weeks I buy the S&P 500 with my retirement contributions, every week I allocate $100 to The Dividend Harvesting Portfolio, and every month I allocate capital to my regular investment accounts. The seesaw battle feels like it never ends as one week, the market is up, and the next week the market is down. In week 104, The Dividend Harvesting Portfolio snapped a 6-week run of positive weeks and finished down -0.65%, only to establish a new positive streak in week 105 as the portfolio finished up 0.81% or $84.93. I don't mind a volatile market as it will always provide me with opportunities to allocate capital where I feel there is value. Hopefully, in a few years, I will look back on the downtrends we have experienced and be thankful for the buying opportunities.

After week 105 and $10,500 of capital allocated, the balance of the Dividend Harvesting Portfolio is $10,584.93, up $84.93 or 0.81% on invested capital. In week 105, I collected $30.22 of dividend income from 23 positions. In 2023 The Dividend Harvesting Portfolio generated $149 of dividend income which is 30.36% of the total dividend income generated in 2022. I ended up borrowing $5 from week 106 and purchased an additional share of 3M Company (MMM) when it was around $109 to dollar cost average into the position. Between the additional share of MMM and the dividends that were reinvested, my future projected dividend income increased by $8.53 or 1.06% week over week to $813.94, which is a forward yield of 7.69%.

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'm 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'm going to address a question that continues to surface. I'm 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

• Income generation
• Downside mitigation through diversification
• 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 and 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

The Dividend Harvesting Portfolio Dividend Section

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

• Equities $239.34 (29.40%)
• ETFs $212.75 (26.14%)
• CEFs $156.53 (19.23%)
• REITs $146.79 (18.03%)
• BDCs $58.47 (7.18%)

Collecting dividends can serve many functions in a portfolio. Some investors utilize dividends to supplement their income and live off. I'm building a dividend portfolio for myself 30 years into the future. In 2022, I collected $490.76 in dividend income from 533 dividends. This has allowed the Dividend Harvesting portfolio to stay in the black while growing the snowball effect. In week 9 of 2023, I collected $30.22 in dividends, and in 2023 I generated $149 in dividend income. YTD I have generated 30.36% of my 2022 dividend income from 110 dividends which is 20.64% of the dividends generated throughout 2022.

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'm hoping to collect around $1,000 in dividends in 2023, which will be reinvested.

Alright, February 2023 is in the books, and I generated $57.58 of dividend income. This chart is going to get very interesting as the year's progresses, and I can't wait to see how the monthly income changes going forward.

I found a tool that can track and visualize my monthly and weekly dividend income. I plan on showing this graph rather than the full year as it's a better visualization than what I had created. In week 105, my total annual dividend count remained 632, and there was dividend income being generated each week. There are dividends coming in around the clock, as March has 15 days of dividend income being generated. This week there is roughly $16.60 of dividend income being generated from 9 dividends.

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. I will be working on moving several of these positions to the last column over the next several months.

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 one 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.

In week 105, ETFs remained the largest section of the Dividend Harvesting Portfolio's composition. Individual equities make up 43.12% of the portfolio and generate 29.4% of the dividend income, while exchange-traded funds ("ETFs"), closed-end funds ("CEFs"), real estate investment trusts ("REITs"), business development companies ("BDCs"), and exchange-traded notes ("ETNs") represent 56.88% of the portfolio and generate 71.6% 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.

In week 105, Verizon (VZ) remained my largest position, but my goal of getting the top ten to flatten out has continued to progress. VZ is getting closer to representing less than 4% of the portfolio, and I will not add to this position until it does even though I have a 5% maximum allocation rule.

Week 105 Addition

In week 105 I added only 1 position and that was:

• 3M Company (MMM)

3M Company

• I had indicated in a prior week that when MMM fell under $110, I was going to dollar cost average into the position. I looked back at my transactions and had purchased my first share of MMM for $171.56 back in the ladder of 2021. MMM had declined by roughly 36.47% since I purchased it. MMM is a Dividend King, and regardless of the turmoil with the lawsuits, I am not cutting my losses and moving on. I added another share and reduced my average price per share by $31.20 or 18.19%. My new average price on MMM is $140.36 without factoring in dividends. If MMM falls under $100 I will definitely add another share fairly quickly.

Week 106 Gameplan

I am planning on adding an additional share of the Reaves Utility Income Fund, and the Cohen & Steers Infrastructure Fund (UTF). I am also considering adding another share of Medical Properties Trust (MPW), and the PIMCO Dynamic Income Fund (PDI).

Conclusion

Just keep buying and investing for the long haul. Every week I allocate $100 to the Dividend Harvesting Portfolio and purchase dividend-producing positions. After Allocating $100 per week for 105 weeks, I have built a portfolio that has proven it can withstand volatility and accomplish its goal of generating an ongoing stream of income. This portfolio has a forward projected yield of 7.69% as its projected annual dividend income is $813.94. It doesn't matter where you start, and you don't need a large sum of capital to make your money work for you. The most important thing is to start investing and never stop.