April 2, 2019: GAIN, LTC

Dividend Portfolio

In my post-tax investing account, GAIN paid their March dividend. I received $163.31. I used the Dividend Reinvestment Program, or DRIP, to automatically purchase 13.9343 shares at $11.72.

Since my last GAIN investment on March 4, 2018, the stock has decreased from $11.76 to $11.72, or 0.34%. In the past, GAIN has traded between $9 and $12 at any given point, so we are at the high end of its valuation in my opinion. Each month, the DRIP is buying me about 14 shares and an additional buck in monthly dividends. I have been so impressed with this company and their management that I have decided to keep the DRIP engaged despite the stock yielding under 7%.

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Gladstone likes to announce three months of dividend payments at a time. If I use historical announcement dates, I believe on April 10, 2019, they will announce the April, May, and June dividend payment. I think this announcement will be an omen for the economy moving forward. I like their management team so much, I may use this announcement to influence my market sentiment for the next 12 months. Here are the three scenarios I see playing out:

1) No Dividend Increase

If Gladstone stays the course for the next quarter, that is a clear signal to me that they are not comfortable in the current environment. I wouldn’t blame them for keeping their dividend conservative since their stock is trading at 52-week highs. They clearly have no need to attract investors right now. If I was management, I may wait until the stock is getting beat up to increase the dividend. Executives use this strategy all the time. For example, if the market is in a downward trend as a whole, a perfectly good stock may be at 52-week lows. Executives may use this opportunity to disclose a bunch of bad information and lower expectations since the stock really can’t take too much more of a beating. Then, when the market naturally swings back up, they have already disclosed all the bad news and beat expectations without doing anything different. Their next earnings call is “we are up 15%, we are increasing the dividend, and we beat exceptions” and everyone looks like a hero.

2) Dividend Increase OR Special Dividend

If Gladstone increases their dividend or pays a special dividend, this is a signal that the future probably isn’t that great, but isn’t disastrous for Gladstone. I think this is a vote of confidence in their ability to beat the competition and survive in an economy that will likely have some hick-ups over the next 1-4 years. I am hoping for this result, but I think I’d prefer a special dividend over a dividend increase. I don’t want GAIN to over burden itself with a lofty dividend for no reason. I would prefer consistent dividends and a healthy balance sheet over an extra penny or two per share that may cripple their ability to place cash in better places.

3) Dividend Increase AND Special Dividend

If this happens then I’m going to apply for a margin account and triple down on this bull because GAIN is going nowhere but up! (kidding) This would signal a very bullish sentiment towards the USA economy over the next year. I don’t think I would change any of my investing methods, but I think I’d feel confident about staying out of cash for a few more months. This firm clearly has close connections with business and real estate since that is their business, so I’ll assume they know more than I do.

In Summary: Happy with 1, hoping for 2, not really sure about 3


In my post-tax investing account, LTC paid their March dividend. I received $27.46. I used the Dividend Reinvestment Program, or DRIP, to automatically purchase 0.5988 shares at $45.86.

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