Dividend 15 Split Corp. (DFN-T)

Uses leverage. Pays lots of yield. Highly volatile. Can be risky depending on markets.

High volatility shares.
Be prepared for large ups and downs.
Not as defensive as other names.

He is not bullish on Canada and would not play dividends through this one.

They take a basket and they make a common shareholder that they give double dividend by leveraging and a preferred shareholder that they pay 5-5.5%. Sounds great but the basket of stocks has to go up significantly in a rapid way if not you lose money. This is the opposite to buy and hold.

The credit rating is lower on these splits than on dividend shares. Don't waste your time. Buy individual preferred shares.

They take bank stocks, or insurance and in some case energy companies, and then they split it internally into preferred shares or common shares, and then they write covered calls on the common shares. They are getting yields around 13-14%. That brings up the question: How is that possible? He’s been doing coverage calls for 30 years, if he get 10% or 12% he is very pleased, but you’re never going to do that consistently. What they’ve got is a very very good yield but if you take a look at the volatility, and there's a lot of volatility, in 2016 the market was down 15% and this stock was down 60%. In 2007-2008, the market was down 60% and this was down 80%. It’s a yield play. Never trust the yield. You have to look behind and see what’s going on there and what’s creating the yield. He wouldn’t touch this.

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.