Dividend 15 Split Corp. (DFN.TO)

Doesn’t like this and never has. They take bank shares and divide them up, so you have some that are newer issues, the preferreds, and they split off the equity portion. Then they write Calls on the equity portion. You are basically getting the yield from the preferred and the yield from the equity portion, which is in fact leveraged. You have to ask, if something is paying 6%, 7%, 8%, and the highest paying dividend on this is only 4%, where is it coming from? If you compare this against ZWB-T or ZEB-T, they far outperformed this. You’re getting a decent dividend, but you are not getting any performance.

Banks, insurance companies, pipelines – all the big dividend payers. He does not mind owning any of these things. It is diversified among a couple of sectors. He has no strong opinion either way. Not a bad buy below $11.

A closed end fund. They buy financials, and then issue a split share to the purchasers, one part preferred and the other equity. Whenever he looks at something offers a 10%-11% yield, and none of the components stocks are paying that, that raises a question. If he were selling Covered Calls, he would expect to get 10%-11% if he were selling the Calls against a whole basket of stocks that he had purchased. On this, that only happens sometimes, not all the time. There is some leverage going on here. Never trust yield.

This really depends on the underlying basket. They come to the market and usually strip out the common shares versus preferred shares. They take the capital from the preferreds, concentrate it and lever it up on the underlying common stock. As a result, you have a much bigger dividend, but you need to have the stocks working for you. If they don’t, you can get twice the risk, and there is usually an expiry of 5-10 years and you can be in a situation of a capital loss.

Dividend 15 Split Corp. (DFN-T) or Dividend 15 Split Corp. II (DF-T)? Both are Split shares. This one is 15 banks and financial institutions in Canada and the US. You have a capital share which is paying a 16% dividend, which comes back to the unit Holder. You are just getting the capital growth that is coming from the banks. He wouldn’t buy both, because you are looking for either growth or income. He would use one or the other and build that in your portfolio.

This holds 15 stocks, both Canadian and US banks. He likes this. If you are going to the capital share on that, that is probably the way he would play it if you are a growth investor. If you are an income seeking investor, he thinks you can be pretty comfortable with the dividend and the preferred share will stay intact, and you will be fine.

If he has a right product, this is one where they split it off and preferreds go one way and the equity holders get more of a leveraged play on the dividend basket. If the mechanics are set up properly, this can be really rewarding for people that have a view that dividend stocks can go higher, which is his view. He is not sure he would use this for his clients, as they really enjoy getting their dividends.

If you think interest rates are going to rise at some point later in the year, these things will continue to do well. This is leveraged to a certain sector in the economy, and if that drops, you can suffer. The return you are getting on this is the yield. If you Buy call options on this, that would play out and you do very well. This is a leveraged exposure to a sector that has done very well.

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.

This is kind of a leveraged play on high yielding common share. Some of them are really good.

15 high dividend paying stocks. When thinking about buying any stock, you are buying it for growth on one hand and income on the other. A split corporation takes those 2 components and splits them apart. The growth is called a Capital Share and the dividends are then paid out to the unit holders as preferred shares. The dividend in the preferred share is like “in the money” covered call option where you are getting a yield that is a little higher than the average preferred share in the market today. From a preferred shares standpoint, because these are deep in the money calls, he thinks it is a very good way to have income in your portfolio and a low risk way to do it.

(Market Call Minute.) Doesn’t see the point in paying a management fee to own 15 financial stocks. Just buy the banks yourself, save the fee and you’ll be fine.

This company holds 15 high dividend paying stocks on the TSX. The way it is structured is that they have a preferred share and a common share and the common share only gets paid if the preferred share has been paid and if there is a certain NAV. Very nice dividend, but you do have that NAV test, so if the banks were to collapse and the NAV declined, the dividend could be in jeopardy even if the banks and other companies were still paying dividends so it’s not quite as clean as it looks, but it is not bad. He would rather just own the underlying stocks. 11.73% yield.