Financial 15 Split Corp T.FTN

Can anyone explain how this stock can pay

[KozmoT]

a  whopping19% dividend and yet hardly anybody seems to know about it?  Shouldn't it be #1 on every investors Must-Buy list. I've got a good chunk of FTN and the only thing stopping me from loading up more is good ole  "If Its Too Good To Be True" suspicion.

Thanks in advance ...

[NoShoesNoShirt]

the nav is now about the same as it was in April 2022. The selling price then was over 9 dollars and the only difference now is the premium evaporated. It will come back with time.

[KozmoT]

So ... Win Win at this price?  Thx but still doesn't explain why this isn't being shouted from the rooftops.

[ehud42]

Who would do the shouting? These are high(er) risk investments - brokers would get into a lot of trouble recommending these to low tolerance investors. Higher tolerance investors eventually discover / find these and hopefully do their due dilligence to determine if they are appropriate for thier strategies.

[KozmoT]

I have a few "high risk" stocks but none of them pay dividends.  I have a good number of low risk stocks but they pay dividends between 5 and 9%.    I guess I can't see what the risk is but I can't seem to square that with a 19% dividend.  I note that FTN has been around for a couple decades and has traded much higher than where it is now.  So either

[meritmat]

  5-9% is not low risk.  Very high.  3-5% is low I look at this like musical chairs.  I plan to be out sitting on my chair at the first sign of danger 

[alkhor]

"5-9% is not low risk.  Very high.  3-5% is low" Yhe big banks Preferred Shares are currently paying 5-6%, so that should be considered low risk.

[KozmoT]

You think Enbridge is a high risk stock? or TRP or DIV or MFC or FIE or RSI or Telus? ... they all pay out over 5% dividends. I don't consider them to be High Risk at all.  I agree with you on the musical chair thing but I just am trying to get a handle on FTN's risk level with its 19% dividend.  

[meritmat]

  hehe I have 6 figures in Enb plus close to that in ENS.   I'm more confident in the company.   Been watching splits for awhile and finally jumped in last month.   I feel like a gambler that's on a hot streak.  Just one more hand......

[ehud42]

The over simplified answer is: Splits eat themselves paying that high dividend. Unless very well managed, they will eventualy implode due to lack of capital gains to sustain the dividend. Be careful - a good dividend only protects so much against a buy high, sell low investment strategy.

[alkhor]

The simple answer is, over the long term it can't. Every single one of these split funds eventually head to a NAV of $15. Once it gets below the $15 barrier it stops paying the common shares so they have the funds to start increasing the NAV back over the $15. A few years ago FTN was wallowing well below the $15 threshold with little chance of getting over it in the foreseeable future 

[Snap2000]

LBS class A since inception in 2014 has never missed a dividend except for 8 or 9 months of covid year 2020.   They must be doing something right to not have it implode.

[NoShoesNoShirt]

OK so I'll jump over to lbs when things get grim.  For now while the party rages on, ftn is the bomb.