Dividend 15 Split Corp T.DFN

Alternate Symbol(s): DFNPF | T.DFN.PR.A | DVSPF

Dividend 15 Split Corp. is a Canada-based mutual fund, which invests primarily in a portfolio of dividend yielding common shares, which includes approximately 15 Canadian companies. It offers two types of shares, including Preferred shares and Class A shares. Its investment objectives with respect to Preferred Shares are to provide holders with fixed cumulative preferential monthly cash dividends in an amount of $0.04583 per Preferred share to yield 5.5% per annum on the $10 repayment amount and to return the $10 repayment amount to their holders on the termination date. Its investment objectives with respect to Class A Shares are to provide holders with regular monthly cash distribution targeted to be $0.10 per Class A share and return the original issue price to their holders on the termination date. The net asset value per unit must remain above the required $15 per unit threshold for distributions to be declared. Its investment manager is Quadravest Capital Management Inc.

TSX:DFN - Post by User

Dividend 15 Split Corp

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Comment by YellowBrickRoadon Jan 22, 2019 3:13pm

174 Views

Post# 29266089

RE:RE:Size of Issue

westcoast1000 wrote: does the share offering imply they will be extending the wind down date of this closed ended fund? I only understood the wind down risk a few months ago while being significantly underwater on the share price.

The fund went through the 2008 crisis and has never missed a distribution. It is the largest split share on the market in terms of market cap. They have extended weaker funds, so I expect they will extend this one as well. There doesn't appear to be any correlation between extending the fund and performance.

westcoast1000 wrote: Mornngstar indicates a fair price for the stock today is about 10.58 (which I expect ignores any risk the fund will close).

Since the last reported NAV is $6.88, I would be interested to hear how they determine what premium to pay is fair. Some people are reluctant to pay a large premium as it reduces yield and leaves one open to capital losses should the premium drop. Others are oblivious as they focus on the yield. With a NAV of $6.88 and a price of $10.58 that is quite a hefty premium of 53%, and they say that is fair price? In the last year, DFN has been trading at an average 21.75% premium.

T 12 Months	Low	High	Range	Average
Premium	18.68%	27.29%	8.61%	23.51%

If the current NAV is around $7.15 averages suggest a fair price would be no higher than $8.75 so it is priced right now on the low side of that mark. Buying with lower premium gives one a better cushion in markets like we currently have and may at times give one capital gains rather than losses.

Buying at a premium in a bull market can work, until it doesn't. Those who don't want to get caught like that have to be patient and wait for the right time - either a market dip or an Overnight Offering. Even then, one can still get caught as it is not easy to buy at the bottom unless you have enough capital to keep dollar cost averging until it turns around.

Fortunately for holders of DFN, the NAV wasn't hit as hard as FFN and FTN and the distribution was not threatened in the 2018 market dip.

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For a comparison of Split Share Funds, see this blog:

Link: Split Share Review

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