PrefBlog

Dividend 15 Split Corp. has released its Annual Report to November 30, 2010.

I can’t help but think that the S&P TSX 60 is not a particularly good index for the fund (why not the S&P/TSX Canadian Dividend Aristocrats?) but despite reservations:

As a result of the Company being limited to a specific universe of stocks and that a covered call writing program is implemented to generate additional income, the investment profile of the Company is quite unique and any comparisons with any other external market indices may not be appropriate.

… the company made the choice so we’ll go with it … while remembering to check every year that it hasn’t been changed!

Figures of interest are:

MER: 1.19% of the whole unit value, excluding one time initial offering expenses. These boosted the whole-unit MER to 2.08%, but bypassed the income statement, being taken as a direct hit to shareholders’ equity. I suggest that the best way to handle this is to amortize the extra 0.89% over the remaining four years of the fund, and call the “analytical MER” 1.41%.

Average Net Assets: We need this to calculate portfolio yield; unfortunately the number of units changesd, which makes it more approximate. The Total Assets of the fund at year end was $269.4-million, compared to $219.6-million a year prior, so call it an average of $244.5-million. Total Preferred Share Distribution was $6.068-million, at $0.525/share implies an average of 11.56-million units, at an average NAV of ((19.21 + 16.83) / 2 = 18.02, so call it $208-million. That’s a big difference, but:

During March 2010, the Company issued 2,400,000 Class A and Preferred shares at a unit price of $21 for total net proceeds after the payment of agents fees of $48.4 million.

. March is about 1/3 of the way through the fiscal year, so the figure derived by preferred share distributions is probably more accurate, so let’s call the Average Net Assets $220-million.

Underlying Portfolio Yield: Dividends received of $9.08-million divided by average net assets of $220-million is 4.13%.

Income Coverage: Dividends of 9.08-million less expenses before issuance fees of 3.01-million is 6.07-million, to cover preferred dividends of 6.84-million is 89%

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