UTMA Account Investments

Our six grandchildren have UTMA accounts that Cindie and I gave them as a gift. Each grandchild owns their account, but I am the custodian of the accounts until they become adults. For the most part, I have invested their funds in ETFs like DGRO, FTEC, DVY, VYM, and FHLC. This gives them dividend income, dividend growth and excellent diversification. It is possible to get a different kind of diversification within a business development company (BDC) like MAIN. MAIN is Main Street Capital Corporation.

Changes to UTMA Accounts

Naperville was my boyhood home. It had an old main street.

This morning I bought a partial share (.946 share) of MAIN in each of the UTMA accounts. There are two reasons I did this. The first is that I wanted a rounded number of shares so that it is easy to calculate the monthly dividend. This gives each grandchild twelve shares of MAIN.

The second reason was that I turned off automatic dividend reinvestment on MAIN so that MAIN’s monthly dividend will come into the UTMA accounts as cash. That way I can decide how much I want to pay for shares of MAIN. The price on the day the dividend is paid might not be advantageous. It is better to buy partial shares, as there is no commission on buy or sell orders.

As a result of these changes, based on the current monthly dividend of $0.21 per share, each UTMA account will receive $2.52 in monthly dividends. That is around $30 per year.

The following images show: 1) the filled buy limit orders; 2) The MAIN detailed quote from Fidelity Investments; and 3) What the buy limit order looks like. Note: I changed the buy limit price from $41.85 to $41.80 after a brief period of watching the price decline.

DNII is Distributable Net Investment Income

MAIN’s operating cost advantages result in substantially higher distributable net investment income (DNII) per share, which makes for more secure and faster-growing dividends over time. This provides more fuel for future purchases. The gallery here shows some reasons why I like MAIN. Note that MAIN is both industry and geographically diverse. Yes, MAIN is a single investment, but it is quite different from other single-industry investment because it is a BDC.

Full Disclosure

Cindie and I own 3,025 shares of MAIN as a long-term investment. As a result, it is in the top ten investments we hold.