Investors continue to search high and low for passive income, including through high-yielding dividend stocks. Yet the problem is that some of these high-yielding dividend stocks have risks attached.
That’s why today, we’re going to look at the Global Dividend Growth Split (TSX: GDV) stock. It offers a 12.73% dividend yield at the time of writing. So, is it worth it? We’ll look at the past, present and future outlook to figure that out.
Past performance
GDV stock overall hasn’t been too bad or too great in the last five years. The equity mutual fund, which invests in public equity markets across the world, mainly invests in growth stocks with a large market capitalization.
GDV stock hasn’t been around for all that long, coming on the market in 2018. Since that time, shares of the company have decreased by 17%. Shares returned to their opening price this year, only to drop by another 17% to where it is today.
In that respect, share growth hasn’t been so great. Yet the company does invest in growth stocks, which could be why we’re seeing it drop. So, let’s see what the company has been up to in the last while
Present movement
Shares have been dropping, as the company continued to announce treasury offerings and market equity programs. Most recently, the company announced in February the offering to purchase Class A Shares and Preferred Shares up to 15% of the number issued at the closing of offering.
This came in at a price of $10.65 per Class A Share, with a distribution rate at 11.3%. Again, this was back in February, leading to a drop in share price by 7%. Yet shares continued to drop before stabilizing around $9.50 recently. This came in the last few weeks, as the company announced it would still be producing a dividend of $0.10 per share on a monthly basis.
So, while shares might be down, it seems this dividend stock will continue to remain focused on delivering a dividend in the present. Hopefully, it turns to growth in the future.
Time will tell
Whether this passive-income stock is worth it for the dividend remains to be seen, frankly. Right now, you can certainly gain access to an ultra-high dividend yield. The issue is that it’s an investor in growth stocks, something we certainly haven’t seen much of lately. And we may not see much of for another year or so — certainly not in 2023.
Because of this, it’s up to an investor’s discretion to invest in GDV stock at this point. Shares may continue to drop as the market remains volatile. Yet if you’re merely looking for a great dividend at a great price, and hoping to hold for a long period of time, then this could be an excellent time to jump in on the stock and let it rise for years to come. This gives you a far better chance of seeing it turn around.
In any case, never take on more risk than your portfolio allows. And when in doubt, speak to your financial advisor, who can offer you solutions to make the most of your income.
