Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (23) | Ignore Thread Prev | Next
Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 50  
Subject: Re: Anyone home? Date: 6/15/2011 3:07 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
To me, the apparent danger is the issue of being called before receiving a distribution. Is there another danger I am not seeing?

No, mainly it's just the built-in capital loss, whereas if you buy below par you have a built-in capital gain. Although the gain/loss is unrealized and may not become realized for quite some time.

When looking at the price, you really should factor in any accrued but unpaid dividend. For example, many of mine pay around $0.46 per quarter, so I have to subtract out about $0.13 per month depending on how far it is from the next ex-dividend date.

Right now I hold BMR-A, looking to sell it when it gets enough above par. Last price 25.40. Dividend is $0.154/mo and we have one month to go to the ex date. So the 25.40 includes $0.307 of accrued dividend for a "real" price of 25.09. That's a yield of about 7.4%, at a built-in loss of only 9 cents. That's probably a risk worth taking, if you can't find anything better that's still under par.

BWDIK? I'm still pretty new at this game.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (23) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Berkshire Hathaway

Is the Market Overvalued?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement