Split Share Corporations: The Good, The Bad, and The Ugly
Do they have a place in your portfolio?
Your author is a pretty simple guy. I like my Diet Coke cold, my TV with sports on it, and my investments simple.
As you all know, my portfolio is filled with Canadian dividend-paying stocks. I try to buy the best companies I can, with a definite bias towards boring, old-economy stocks that are mature enough to pay dividends. I prefer growing dividends, however, I’ll buy a stagnant dividend if I think some of the other factors are compelling enough.
That’s really about it. Like I said, it’s a simple approach, one I think can be replicated by just about anybody. With a little help, anyway, and that’s where I come in.
Investing is hard enough without trying to make it complicated. In a world where the average retail investor makes a paltry 3% per year and even the pros struggle to beat the market, delivering a decent result can be tricky. The time factor makes getting a decent result all the trickier, since we really only have one shot at this long-term investing thing.
This is why I value a conservative “don’t blow up” approach to my portfolio.
Saying that, I still have a responsibility to check out all the other investing options out there. I want to make sure I’m not missing out on some new complex product that’s actually a pretty good deal. So I check out things like covered call ETFs and closed-end funds to make sure I’m not asleep at the wheel.
Spoiler alert: I’m never missing out on anything. The proverbial grass is never greener.
One of the dirty little secrets of investing is a simple strategy is just about always best. Banks, hedge funds, or financial advisors will recommend all sorts of weird strategies designed to generate excess returns, most of which underperform all while sucking up high fees. That’s a lose-lose combination, kids. Yet each year millions of high net worth investors are suckered into these products, successfully convinced that, for some reason, complexity = good.
With that in mind, let’s take a closer look at one of these alternate investments — split share corporations.
Are they worth it? Let’s check it out.
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