Swissquote adds Leveraged Cash Dividends certificate to Themes Trading
Leading Swiss online trading firm Swissquote has further expanded its Themes Trading lineup via the addition of Leveraged Cash Dividends certificate.
Swissquote’s newest certificate aims to boost one’s portfolio with dividend stocks that come with a little extra bonus – they are leveraged by x1.33. Powered by this leverage the certificate will be able to distribute a minimum of 5% p.a. of the issue price, at least 1.25% every quarter.
What is a leveraged cash-in ? Here’s a simplified example: Let’s assume a constant x1.33 leverage and a company paying a 4.52% dividend yield. Investing with leverage means that for 1 000 CHF coming from your pocket, 1 330 CHF is invested in the company. Therefore you get 60.12 CHF instead of 45.20 CHF as a dividend payment which is equivalent to a 6.01% yield given the initial investment of 1 000 CHF (instead of 4.52%). Yes +33%, you read that right.
The underlying portfolio gathers companies that have gained leading positions in their markets, and have strong competitive advantages such as network effect, cost advantage, brand value and intellectual property.
The basket is made of high dividend-yielding companies and balanced with established blue chip and conservative companies from different sectors that distribute more modest dividends, but that can be relied on.
To mitigate the risk associated with the leverage, Swissquote has curated a robust stock portfolio to underpin the Leveraged Cash Dividends certificate and has chosen a relatively contained average leverage of x1.33.
In addition to the dividend boost, leverage amplifies the total return of one’s investment. In this case, if the stock price increases by 10% your return will be 13.3%. On the other side a -10% will translate to -13.3%.
Themes Trading is Swissquote’s collection of thematic portfolios, which allow traders not to buy individual stocks but assortments of stocks. Investors opting for this thematic investment are looking at what lies ahead and can therefore position their portfolio for faster growth and higher returns.
Swissquote introduced Themes Trading in September 2015. Back then, the service offered an initial set of 30 diverse themes, including global electric, cyber security, Greek recovery and fitness trends. The service offers investors to find opportunities in thematic investing, coupled with the highest possible transparency.
Swissquote has been regularly expanding its themes trading lineup. Recent additions include the Semiconductor Industry Portfolio and Logistics.