not 100%, however i believe you borrow the money from westpac to purchase shares at a pre set interest rate. the dividends are then paid to the bank as payment on the loan for your shares. if the shares do poorly with low dividends, then the interest will accrue for longer so you pay more for the share. im guessing that if you sell the share then the capital return goes to the bank to pay back the loan also, with you keeping any gains. if thats correct then i would think its best suited for stocks with potential short term capital growth so you can buy and sell for profit on someone elses dime, otherwise you are assuming the risk in the share price movement while the bank reap any dividends for free while charging you an interest rate on the borrowed money.
WBC Price at posting:
$26.02 Sentiment: Buy Disclosure: Held
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