Diversification through Appreciation: GAIN, LTC, AGNC

This article explains how I used the capital gains from one dividend stock to purchase two additional dividend stocks


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The 635 shares I sold provided $43.18 of monthly dividend income. My goal was to replace and increase that income by reinvesting in two stocks instead of one.

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At the time of selling, GAIN paid a monthly dividend of $0.68. When I purchased the 635 shares at $9, this represented a 9.07% yield. When I sold at $12, this represented a 6.80% yield.

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The day after selling the stock, February 12, 2019, I invested the $7,619.90. I had previously been investing in LTC and AGNC and decided to reinvest the funds into these two stocks.

I chose AGNC because I wanted to diversify into another sector. Debt and financials would benefit from rate increases and American debt and that seemed to be all the rage in 2019 when I made this decision. However, it doesn’t take a degree in finance to know that the 12% yield is just ridiculous, but at that point one of my goals was to increase risk and therefore upside potential. I still hadn’t been burned by a dividend stock cutting their payments, so I decided to keep creeping up my risk profile.

I decided I needed to share time with something far less risky. I landed on LTC, which is basically a portfolio of assisted living homes with a mere 4.85% yield. I am bullish on assisted living due to the increase of aging population. By purchasing a 12% and a 4% yield, I would be diversifying into different sectors and risk profiles.

The table below displays what I did. I decided to put 1/3 into LTC and 2/3 into AGNC. At the end of the day, I turned $43.18 a month into $61.37 a month, an increase of 42.13%

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This new investment yielded a weighted average of 9.70%, which roughly represents my initial yield originally in GAIN in 2017.

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