Bad News is Everywhere Everyday
There are two certainties in life: death and taxes. Actually, there are far more than that, but those two always come to mind. Other certainties are “you will reap what you sow” (Galatians 6:7), “a fool says in his heart there is no God” (Psalm 14:1), and “the Son of Man came to seek and save the lost” (Luke 19:10). However, there are other certainties as well. One certainty involves investing. There will never be a day when there is no bad news on the investing front. Some days it seems all of the news is bad, or even worse than bad.
What does an investor do? A long-term investor picks a strategy and sticks with it.
Investors Need Reminders
Life is full of forgetting. Even long-term investors can look at their results for the year and start to question their success. One way I am reminded of my strategy and focus is by receiving dividend announcements for stock and ETF positions in our accounts. Here is a sample of nine different recent dividend announcements, including PFE, GTY, IBM, ARCC, OMF, HIW, STX, SCM, and GAIN.
GAIN, or Gladstone Investment, is a Business Development Company. Cindie and I own a combined total of 4,324 shares of GAIN. Our grandchildren also own shares of GAIN in their UTMA accounts that I manage. GAIN pays a monthly dividend and sometimes pays a supplemental dividend on top of the monthly dividend. This is the case for the next three months. If you multiply our 4,324 shares by the total quarterly dividend we will receive of $0.36/share, we will receive $1,556.64 in dividends by June 30, 2023. The general news in the market may be discouraging, but this is a nice reminder of the benefit of my strategy.
GAIN’s Dividend History
Some years are difficult and during the 2008-2010 and the Covid-19 scares, there were dividend reductions. Again, a long-term strategy helps an investor weather these more pronounced times of economic upheaval. As long as the income continues, it is rarely a good idea to sell a solid investment.
GAIN and Wayne’s Scorecard
GAIN qualifies for my Easy Income Strategy (EIS), but it is not for everyone. First of all, it is best to focus on good dividend growth ETFs. Investments like GAIN should only be added to supplement your entire portfolio and GAIN should never be more than five percent of your total portfolio. In our case, GAIN is a large holding, but it is no where near five percent of the total.
When it comes to investment returns there are always three pieces to remember. The first piece are the dividends you have already received. This is a bird in the hand that cannot fly away. The second piece is the growth in the value of the investment. If you can eventually sell the shares for more than you paid for them, you have a return on your investment. Finally, always remember that there are costs in the equation. Therefore, always seek to minimize your ETF costs that eat away at your returns. GAIN has a good ten-year return based on the following data from StockRover.
As always, diversify your investments. If you are in retirement, it certainly doesn’t hurt to have investments that pay you monthly. Those types of investments can help you stay the course when everyone else is selling because of the most recent bad news.
Cindie and I own a combined total of 4,324 shares of GAIN in our IRA and ROTH accounts. We also have shares of the following investments: PFE, GTY, IBM, ARCC, OMF, HIW, STX, SCM, and GAIN.