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Dividend Growth Split Corp T.DGS

Alternate Symbol(s):  DDWWF | T.DGS.PR.A

The Funds investment objectives are to provide holders of Preferred shares with fixed, cumulative, preferential, quarterly cash distributions and to return the original issue price of 10.00 per Preferred share to shareholders at maturity; and to provide holders of Class A shares with regular monthly cash distributions, targeted to be at least 0.10 per Class A share, and the opportunity for growth in Net Asset Value per Class A share. The Fund invests, on an approximately equally weighted basis, in a portfolio consisting primarily of equity securities of Canadian dividend growth companies. In addition, the Fund may hold up to 20% of the total assets of the portfolio in global dividend growth companies for diversification and improved return potential, at the Managers discretion.


TSX:DGS - Post by User

Bullboard Posts
Comment by bcscon Dec 04, 2017 7:30pm
197 Views
Post# 27089254

RE:What's the catch?

RE:What's the catch?While no expert, I can certainly point you in the right direction. Your assumption that there is seemingly next to zero risk is due to the fact that you have only been following DGS during a time of flat or increesing markets. The Beta coefficient of DGS is 2.44. This is a measure of the corelation between the return on DGS and the return on the general market as a whole. Theoretically if the market as a whole goes up 10% your return on DGS goes up 24.4%, but as 15% is returned to you as monthly distribution, the price increase is similar to the overall market.

If however the general market drops 10%, DGS return drops 24.4%, but since you have been recieving  distributions of 15%  you can theoretically expect the price to drop almost 40%.

This is admittedly an oversimplification but gives you an indication of the inherent risk in high beta securities, particularly those with high yield as beta is a measure of return not simply price.

If someone with greater knowledge than I can provide a better explanation, I welcome it.
Bullboard Posts