An 11% Dividend Yield: Dividend 15 Split Corp – Larry MacDonald
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Thank you to Larry MacDonald for asking me to comment on my opinion of the Dividend 15 Split Corp. Both Brad from Triaging My Way To Financial Success and I provided comments on this financial product.[ad#tdg-embedded]
I think Brad’s comments were especially pertinent about the risks inherent in products such as this:
What goes on behind the scenes at a lot of these split share structures is a lot of option writing by portfolio managers. The problem with writing options is that they can provide excellent gains to the fund, but without adequate disclosure to investors on what actual activities are occurring there is the potential for unforeseen risks that investors might not otherwise take note of.
Be sure to check out Larry’s other articles over at his blog.
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Smac20 said:
Option writing is a wonderful way to improve portfolio returns. Let me qualify this statement though–option writing is a wonderful way to improve portfolio returns in a sideways market. When there is major volitiilty you will receive more option premium, but the risk is much higher and in my opinion not worth the sleepless nights.
December 8th, 2009 at 1:43 pm
