Investing

DFN and DFN.PR.A

  • Last Updated:
  • Dec 19th, 2018 10:05 am
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8 replies
Deal Addict
Jul 27, 2017
2180 posts
941 upvotes
DFN 11% is a no brainer as long as you understand its only about the dividend income & not about any growth in the stock price.

Past 5 years stock price other than the 2016 dip seems fairly stable $10 - $11 range

11% return on a $11 investment gives you a 100% return on investment after ~9 years & thats without DRIP
Member
Mar 26, 2004
380 posts
285 upvotes
Oakville
compare DFN to DF, DFN is trading close to NAV and one of the rare few that do... DF is a joke it is trading at a 50 - 60% premium to the NAV and is not as liquid. These splits that trade at massive premiums will get smoked if and when a correction occurs.
Deal Addict
User avatar
Aug 1, 2007
1424 posts
217 upvotes
With these split corps, the capital shares get all or most of the capital gains and losses, and the preferred shares get most of the dividend income. The income from the underlying holdings isn't anywhere near what they need to pay out so they have to count on some option writing and selling some of the underlying to meet the distribution.

In theory the capital share can lose most or all its value, depending on the structure, before the net asset value of the pref is affected. So in rough times, remember that the capital shares will tank pretty quickly.

Institutional investors don't really touch these other than for shorting for nav arbitrage so retail investor behaviour/panic can also knock either side down regardless of nav.

Bottom line, the prefs have a bigger safety cushion but it's probably not a good idea to get lured in by the juicy yield and invest too much in either side.
Newbie
Oct 3, 2017
60 posts
13 upvotes
Hey guy's, I have a question about DFN and split stocks in general. From what I gather if the fund is terminated they buy back the shares? But i'm trying to figure out what they would buy the shares back at? from the fund's documents it sounds like they buy it back at their original issue price? But I was also looking at the Brompton Funds Dividend Growth Split Corp (DGS) and their buy back structure says "The Class A Shares will be redeemed by the Company on November 30, 2014. The redemption price payable by the Company for a Class A Share on that date will be equal to the greater of (i) the NAV per Unit minus the sum of $10.00 plus any accrued and unpaid distributions on a Preferred Share, and (ii) nil. " would that mean they would buy back the share for DGS for 7.71?
Deal Addict
Jul 27, 2017
2180 posts
941 upvotes
split shares especially the class A shares are like anything else listed on the TSX

DFN class A shares - reports 170 months of continuous distributions, so that appears to be a good investment or is it?

https://web.tmxmoney.com/article.php?ne ... symbol=DFN

class A shares you should always consider as 'return of capital', so basically unless the NAV drops below $15 (Brompton & Quadravest) taking 11%/year distributions in ~9 years the investor (should consider this) have recovered their investment (100% return of capital ROC) & hopefully the class A split share is still trading, which basically means you have 100% ROI on your investment

On the lower interest rate preferred split shares average 5%, these seem to hold water better than the class A's

Invest at your own risk & if investing in class A split shares do check their NAV & discount value (NAV to share price)

you may also check the ongoing 'review' report of split shares on SH, someone there provides a regular report

http://www.stockhouse.com/blogs/split-share-review

Quadravest funds

https://www.quadravest.com/productsgallery

Brompton funds

http://bromptongroup.com/funds/
Newbie
Oct 3, 2017
60 posts
13 upvotes
What I'd like to know if they were to vote not to extend the fund date. How would a buy back look?Hhow do I figure out what the buy back price would be for a class A share?
porticoman wrote: split shares especially the class A shares are like anything else listed on the TSX

DFN class A shares - reports 170 months of continuous distributions, so that appears to be a good investment or is it?

https://web.tmxmoney.com/article.php?ne ... symbol=DFN

class A shares you should always consider as 'return of capital', so basically unless the NAV drops below $15 (Brompton & Quadravest) taking 11%/year distributions in ~9 years the investor (should consider this) have recovered their investment (100% return of capital ROC) & hopefully the class A split share is still trading, which basically means you have 100% ROI on your investment

On the lower interest rate preferred split shares average 5%, these seem to hold water better than the class A's

Invest at your own risk & if investing in class A split shares do check their NAV & discount value (NAV to share price)

you may also check the ongoing 'review' report of split shares on SH, someone there provides a regular report

http://www.stockhouse.com/blogs/split-share-review

Quadravest funds

https://www.quadravest.com/productsgallery

Brompton funds

http://bromptongroup.com/funds/
Deal Addict
Jul 27, 2017
2180 posts
941 upvotes
Jesster202 wrote: What I'd like to know if they were to vote not to extend the fund date. How would a buy back look?Hhow do I figure out what the buy back price would be for a class A share?
using the class A splits shares, not the preferreds

when there was income trusts/trust units, those companies generally redeemed at the last share price or NAV when they made the announcement of redemption.

so lets say an investor paid $10/share, held them for a while, got paid several distributions, but now the stock & its NAV is below the $10 purchase price.

for the class A shares, you wont get the $10 issue price, what you paid for the stock if was higher than the NAV price or what the stock is currently trading at, more likely just the class A portion of the total NAV

DFN class A NAV sits at approx $8.34. So take the total NAV of $18.34 (quadravest website) preferred share of $10 + $8.34 for the class A

The class A shares are worth approx $8.34 even though the stock is trading at $10+
Member
Apr 15, 2009
232 posts
240 upvotes
toronto
Does anyone have a clue why is DFN.TO in free fall last few months?

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