Q: The vast majority of my holdings are non-dividend paying growth stocks. The one exception is HMAX, which I purchased earlier this year for its 15% dividend. It is now 3.5% of my portfolio and I am contemplating increasing this to a full position. My reasoning is that most of the bad news in the banking/insurance sector has already been factored into the share price and that, overtime, HMAX's value will rise again. Meanwhile, I'll receive a healthy dividend. I bought HMAX at $13.67; today it's trading at $13. 24. Do you believe the dividend is safe (I'm aware it was reduced last year from 17%) and do you see the current price as a buying opportunity assuming one has patience, likes the dividend, holds no other banks or insurance companies and expects only moderate growth going forward? Thank you.
5i Research Answer:
Yes is the answer on most of these questions. The distribution will vary with option premiums...