Opinions
Larry Berman CFA, CMT, CTA
Dividend 15 Split Corp.
DFN-T
DON'T BUY
Sep 24, 2018
$10.010
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DON'T BUY
Yield of the ETF is higher than the components of the underlying stocks. They split the stock into preferred and equity. They sell options out of the equity version. A lot of investors don't know that there is leveraging that can hurt the price, and a high yield comes with risk.
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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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He is not bullish on Canada and would not play dividends through this one.