Dividend 15 Split Corp T.DFN

Whats with the decay?

[Dickey01]

I've only been in this since April and still not totally sure how it works, but what's always kinda bothered me is the long term chart. 10 years ago this was over $12 while the TSX was only $15000. Now we're only at $6.66 while the TSX is over $25000. Whats the reason for this? Is the decay necessary to pay out the dividends every month or what?

[mouserman]

The dividends collected in DFN only barely pay to DFN preferreds  and those are going up in % yield here next month. It is capital gains that pay the common shares the distributions. Great in a bull market , but very risky in a bear market. DFN also paid out a few times when they really should NOT have, as the  UNIT NAV was not 15$ on  midmonth date. BUT  they fudged the date

[saddlerack]

That is exactly correct. Without a bull market the NAV has to slowly erode as the excess is paid to the commons. However with a bull market there is plenty of excess NAV and the payouts look secure. I think that this is pretty much the same with all of the splits that I follow. They are great when the market, or more correctly the sector that they invest in, is rising, but without that, they

[NoShoesNoShirt]

I looked at IS, and it looks interesting. It's brand new?  I clicked on 10 year chart and got 6 months. 

[saddlerack]

I found the same. It is very thinly traded with an average daily volume of less than 6,000 shares. I watched it today and there was almost always a 15 to 20 cent spread between bid and ask. It makes it hard to justify buying very much.

[Beuler]

Math it, decays from 12 to 7 over 10 years, that's $5 or 50 cents a year on average. It pays out 1.20 per year, so it should not be a concern.