But you do realize that the dividend paid out - however high - is deducted from the share price? In this respect, it's a zero number, just like when you withdraw capital from your investment that is immediately taxable.
If you have a portfolio of several million, you are welcome to put 100k in a stock like Torm, otherwise just casino.
Why Torm? There are countless better stocks or assets where you can leverage with outside capital.
Just don't fall into the divi trap👆
If you have a portfolio of several million, you are welcome to put 100k in a stock like Torm, otherwise just casino.
Why Torm? There are countless better stocks or assets where you can leverage with outside capital.
Just don't fall into the divi trap👆
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@TomTurboInvest Thank you for your frank feedback - that's why I asked the question.
It is true that the whole thing has to be taxed and the dividend is deducted from the share price on the ex-date. Nevertheless, the company does not stand still and (hopefully) continues to earn money, so that the share price still rises or at least stagnates over the 5-year term.
Ideally, distributions would be needed to service the loan, as otherwise the monthly installments would have to be made from other sources or from the sale of shares until maturity.
I would see Torm here as just one possibility or example. In reality, you could also divide it up into several assets to at least mitigate the cluster risk somewhat.
It is true that the whole thing has to be taxed and the dividend is deducted from the share price on the ex-date. Nevertheless, the company does not stand still and (hopefully) continues to earn money, so that the share price still rises or at least stagnates over the 5-year term.
Ideally, distributions would be needed to service the loan, as otherwise the monthly installments would have to be made from other sources or from the sale of shares until maturity.
I would see Torm here as just one possibility or example. In reality, you could also divide it up into several assets to at least mitigate the cluster risk somewhat.
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@NichtRelevant In principle, there is nothing wrong with a loan, but you have to be aware that this is leveraged market timing.
It is not the dividend that is decisive for the interest on the loan, but the price performance.
Torm was at €7 3 years ago, imagine you buy at €20 and at the end of the loan term the share price is at €7.
Personally, I would only consider this if I fully expect a bull market, everything else will be a flop. What good is it if the interest is covered by a dividend but the capital is at -70%?
What I wouldn't do under any circumstances is to encumber an unencumbered property for a loan for shares. And then invest the loan in a volatile sector such as shipping. I would look for something more conservative.
PS: in your calculation with 1.7% repayment and a term of 5 years, there must still be a mistake, that doesn't work out at 1.7%...
It is not the dividend that is decisive for the interest on the loan, but the price performance.
Torm was at €7 3 years ago, imagine you buy at €20 and at the end of the loan term the share price is at €7.
Personally, I would only consider this if I fully expect a bull market, everything else will be a flop. What good is it if the interest is covered by a dividend but the capital is at -70%?
What I wouldn't do under any circumstances is to encumber an unencumbered property for a loan for shares. And then invest the loan in a volatile sector such as shipping. I would look for something more conservative.
PS: in your calculation with 1.7% repayment and a term of 5 years, there must still be a mistake, that doesn't work out at 1.7%...
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•@TomTurboInvest Cool, thanks. I'll think about it. Maybe I'd rather borrow against the land register, extend the roof and rent out the apartment there.
Only then will I continue to invest in real estate, although I'm already totally overweight in that anyway.
Only then will I continue to invest in real estate, although I'm already totally overweight in that anyway.
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