Opinions
John Hood
Dividend 15 Split Corp.
DFN-T
COMMENT
Feb 16, 2016
$9.330
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DON'T BUY
DON'T BUY
You get a magnification of performance both on the upside and the downside. So much easier to just buy the individual holdings, collect the dividend, get the capital appreciation, and not pay a fee. Why buy this manufactured security when you can buy the real thing? Doesn't trade well, and you're locked in.
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WEAK BUY
These companies are hybrids created by the big brokerages and owned by banks like Woody Gundy. They enhance yield by splitting off the growth portion of a stock from the yield-paying portion. Usually, this works, but you're giving up growth opportunities. Fees are involved, though. He doesn't own these derivatives. Not a bad idea for a retail investor looking to increase income.
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HOLD
Takes 15 stocks, splits them into preferred and common, and here you're left with the common shares. The preferred shares get guaranteed dividends, and the common shares get everything else. Coming to more of a historical long-term level, which is stable. People buy this for the dividend, not for capital gains.
Overall, looks like a stable investment. He wouldn't worry about the dividend. He can't recommend a buy on it yet, as he'd have to do some more research to fully understand it as well as the dip in the chart.
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Basically a closed end fund. This pays about a 14% dividend. When you look at the stocks in this fund, primarily banks and some of the oils, none of them are paying that kind of a dividend, they are paying 4%-5%. When you find something that pays 14%, it is not time for a pat on the back, but is a time to say “look at this more closely”. The company uses Covered Calls on this. He has been using Covered Calls for 30 years, and has never been consistently able to get 14%, so there is something else going on. There has to be leverage of some form or another. You need to look at this more closely and see what is going on.