Dividend 15 Split Corp T.DFN

About To Do Something Stupid

[Jones1989]

Hey Everyone, i think I am about to purchase $35,000 of DFN on margin.  I have $20,000 up front and setup a brokerage account at National Bank just for this purpose.  The monthly margin fee will be $72.92 and the dividends will be $453.30 to start.  The plan will be to roll dividends and any margin growth back into more shares monthly to continue too grow the dividends paid out.  I have $$3500 set asside as a buffer against a margin call.  The only thing that can kill me is if the dividend gets cut but that has only happened for 3 months over the last 11 years.

Just waiting for it to dip a little more as its underlying holdings are still bleeding a little...

Kicking myself for not doing this when it was sub $7 last month...

[Clarke123]

Would have made so much more sense at sub 7, when premium was under 10% as well. Premium is almost 30% now. So Ceteris Paribus, DFN can easily fall 15% (or even 20%) on some large sell order. And dividend payment cushion is just 6-7% now. So one more leg of selling in underlying stocks, and we are going to see dividend stopped. I would suggest you to hold off for now. Wait for that large move

[Clarke123]

A bit more perspective: DFN is already 1.9X leveraged. You are planning to use another 1.75X on your margin account. That will make you total 3.3X leveraged on underlying, and at roughly 5.9% cost. That leverage means 30% move lower on underlying will wipe your capital out. You will get margin call lot earlier, depending on where your account is. That $ 3,500 will protect only a tiny bit