Dividend Harvesting Portfolio Week 170: $17,000 Allocated, $1,515.47 Projected Dividends

This was another interesting week as we get closer to the June FOMC meeting. The US core PCE index increased by 0.2%, which was lighter than the consensus estimate of 0.3% in April. This can certainly be looked at as positive, as it’s the slowest increase in MoM in 2024, and the last time PCE increased by 0.2% was in December of 2023. The Fed pays close attention to this metric because it takes consumer spending into consideration, whereas CPI is often looked at as a cost of living fluctuation. This is a light week for economic news as we will get non-farm payrolls and the unemployment rate on Friday, the 7^th, before heading into the CPI print and the FOMC meeting the following Wednesday, June 12^th. The market sold off a bit this week as the S&P 500 slipped -0.63% and the Nasdaq declined by -1.53%. CME Group has basically eliminated the probability of a rate cut in June, with a 99.9% chance of rates remaining where they are. While tech is still front and center, I anticipate that we could be in a rocky environment over the summer for sectors such as real estate if Fed Chair Powell isn’t as dovish in his commentary as he was last month. No matter what happens, I will buy and add to the positions within the Dividend Harvesting Portfolio.

Well, this was another strong week for the Dividend Harvesting Portfolio. I exceeded $100 of dividend income in the month of May, and the return on invested capital is almost at all-time highs. After allocating $17,000 to the Dividend Harvesting Portfolio, its account value is $19,403.72, which is an ROI of $2,403.72 or 14.14%. On a profitability basis, the account appreciated by $259.46, excluding the $100 of weekly allotted capital. In week 170, I expanded my holdings in business development corporations (BDC) as I added the Blackstone Secured Lending Fund (BXSL) to the Dividend Harvesting Portfolio. This company has been talked about for some time, and it’s been one of the most recommended stocks for me to add, and I finally did. In week 170, I generated $31.46 of dividend income, and the combination of reinvesting the dividends generated and adding BXSL to the Dividend Harvesting Portfolio has increased my forward projected annualized dividend income $12.41 (0.83%) to $1,515.47. Things are going well, and there are a lot of opportunities on the horizon for the Dividend Harvesting Portfolio to generate income and appreciation. I am excited to see where things are headed, and it looks more probable that the Dividend Harvesting Portfolio will generate at least $100 of monthly dividend income going forward.

The overall performance of the Dividend Harvesting Portfolio

The beauty of diversification is that even if the market goes down, there are positions within your portfolio that will go up. This is exactly what occurred in week 170 as the markets went down, but the Dividend Harvesting Portfolio’s profitability grew 1.45% week over week. This portfolio is being built for income as I want to generate more than the risk-free rate of return and to mitigate downside risk. This week is a testament to how a diverse portfolio can help stabilize market conditions. Capital appreciation is a secondary objective, as I am not interested in beating or replicating the market’s annualized returns. No matter what happens, I will continue to allocate capital toward the Dividend Harvesting Portfolio, and if the Fed gets hawkish again and REITs decline, I plan on focusing on Realty Income (O) VICI Properties (VICI) and some others over the next several weeks.

The Dividend Harvesting Portfolio dividend section

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

• Equities $430.14 (28.38%)
• ETFs $362.27 (23.90%)
• REITs $282.64 (18.65%)
• CEFs $262.37 (17.31%)
• BDCs $168.25 (11.10%)
• Treasuries $9.80 (0.65%)

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 22 weeks in 2024, I have collected $578.81 from 295 dividends. This is 59.30% of the total dividend income generated in 2023 from 44.70% of the dividends produced.

In week 22 of 2024, I generated $31.46 in dividend income. On average, I have collected $26.31 in dividend income this year compared to $18.77 in 2023. Compared to last year, my dividend income this week grew by 44.44%, and as time progresses, I expect this to continue expanding. I think that by the time 2024 has concluded, I may have generated over $100 in a single week of dividend income. All of the income that is generated gets reinvested, and it will be interesting to see how the rest of this year unfolds and what the first 22 weeks of 2025 looks like in comparison to 2024.

It happened, I generated over $100 of dividend income in the month of May. This marks the first time I have had 2 consecutive months of triple-digit income. Ending the month on a Friday will make it a bit easier to track June in the chart below. With June being the last month in the quarter, if I can generate over $100 of income, then I will be convinced that the goal of generating triple-digit income each month has been completed. In April, I generated $142.46 of dividend income, so my next goal is to produce $150 in a single month. Things are starting to get exciting, and as I continue to invest and grow the stream of income, I believe the snowball effect will intensify as more income is reinvested each week.

This is getting a bit annoying as Kinder Morgan (KMI) fell back into the 90-100% column for companies that are producing one share annually from their dividends. The goal is to have as many companies in the green sector of the table below as possible. There are now 3 positions tittering on the edge and a bunch of positions generating between 40-70% of their share price from their dividends. Currently, 31 positions are generating at least 1 share of their dividend income. The new shares they are producing are adding roughly $110.95 of new dividend income to the Dividend Harvesting Portfolio. Eventually, I would like every position in the green section, but that’s going to take a lot of time. For now, I will continue knocking this objective out 1 company at a time.

The Dividend Harvesting Portfolio composition

The Dividend Harvesting portfolio is appreciating in value, and the percentage of the portfolio that REITs represents continues to decline. This is music to my ears because I want to add to my position in Realty Income, VICI Properties, and CTO Realty Growth (CTO) over the next several weeks. I will probably wait until the Fed meeting to see if Fed Chair Powell spooks the market with a higher for longer narrative. As of now, I am not really restricted in where I allocate capital, as ETFs and REITs are hovering around the 19% mark. I like the balance the portfolio has and will try my best to even things out further.

Individual equities now represent 38.56% of the Dividend Harvesting portfolio while generating 28.38% of the dividend income. REITs, ETFs, CEFs, and BDCs make up 61.44% of the portfolio and generate 71.62% 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.

Altria Group (MO) is still towering over the rest of the positions in the Dividend Harvesting Portfolio. I still think there is value to be unlocked, but I am still holding off on adding to the position as it’s almost at 5% of the portfolio. The top-10 positions remain unchanged, and their percentages are starting to flatten out. Over the next several months, I think there will be some significant changes to the top-10 holdings, and some of the usual components will fade into the next tier. I haven’t given up on building out the next tier of companies, but if I do it for this section, I have to do it for the following section, and it is going to take some time.

As the positions haven’t changed, the allocation to the top-10 positions remains at $5,121.38. They are now worth $6,171.69, which is an ROI of $1,050.31 (20.51%). There has been $597.35 of dividends generated and reinvested, which is 11.66% of the initial invested capital into this group of positions. I am now projecting that $479.13 of dividend income will be generated from the top 10 holdings, which have a forward yield of 9.36%. These positions represent 31.81% of the portfolio, while their forward dividend income is projected to generate 31.62% of the Dividend Harvesting Portfolio’s annualized income.

Week 170 Additions

Week 170 is here, and it’s Reader Suggestion week. I selected a position that could be the most requested position in the history of this series. Based on the number of comments on the Blackstone Secured Lending Fund, I ended up doing a significant amount of due diligence and wrote a dedicated article on it (can be read here). This is one of the largest BDCs, and I am shocked it didn’t make it to the Dividend Harvesting Portfolio sooner. Thank you for continuing to suggest this company, as I am very happy, I added it in week 170.

Blackstone Secured Lending Fund

• I really like the diversification in this BDC, as its largest exposure to a single company is 3%.
• I love senior secured debt when it comes to BDCs, and they have 98.5% of their investments tied to first-lien senior secured notes.
• The Blackstone Secured Lending Fund has increased its weighted average yield on debt to 11.80%
• Over the past 3 years they have increased their quarterly dividend by 54% from $0.50 to $0.77.
• There is still more room for dividend growth, as the dividend payments only account for 78.39% of its Net Investment Income (NII) per share.

Week 171 Game Plan

I am planning on adding to my position in Bristol-Myers Squibb (BMY) and either Pfizer (PFE) or Kinder Morgan (KMI).

Conclusion

I am really excited to see how the Dividend Harvesting Portfolio progresses into the back half of 2024, as I am now projected to generate $126.79 in dividend income each month. It was certainly a slow start, but when I look at the chart below, it’s impressive how the forward dividend income has grown as more dividend income is being produced. I started this portfolio with $100, and no matter what, I kept investing. Regardless of if you’re building an income portfolio or just investing in an S&P 500 index fund, consistency is your partner and will work wonders over time. I think that there is a lot of value to be unlocked in the Dividend Harvesting Portfolio, and I will continue allocating capital each week for many years to come. Please leave all of your comments and questions below, as I try to interact with everyone in the comment section.