RE:RE:Knowing when to sellSplit funds like LBS stop paying out the monthly dividend to the common component of the split (as opposed to the preferred component which always pays out) when the NAV of the common dips below $5.00.
It I think LBS has gone through 3 periods (1 nine month, 1 six month, and 1 three month) when investors didn't receive the dividend. Those can be scary times for investors who depend upon the high yields offered by splits.
The periods when LBS isn't paying a dividend also represent enormous investing opportunities for investors. For example, a quick look at the chart for LBS shows that you could buy it for $3.86 on July 1, 2020 and it was trading at $6.53 by November 1st 2020 which means that it was once again eligble to receive the $0.10 per month dividend. The price then moved all the way up to $10.90 by February 1, 2021 which represents a 182% capital gain. LBS has been continued to pay out $0.10 per month since the NAV moved above $5.00 which represents a 31% yield for anyone buying at the bottom.
Whenever the yield is well above market yields, the risk goes up accordingly so Splits represent a cautionary tale. However, if you have dry powder and are patient, Splits can be an extraordinary investment as the example shows. The fact that LBS is a bank Split means that the probability of a strong recovery from the bottom is very high as the holdings in the Split are bank and lifeco shares. If the banks and lifeco's don't recover, we have bigger things to worry about than how are investment portfolios are doing.