Reference
Worked example
The same split, on the same date — 17 Dec 2027 — applied to a high payer and to a company that barely pays at all.
The mechanism does not change between these two. The dividend policy does, and it changes the entire character of the trade.
A high payer#
Pfizer trades at $25.40 and pays about $1.72 a year. Against the 17 Dec 2027 maturity, one token’s remaining dividends come to roughly $2.22, so one YT prices near $2.15 and one PT near $23.25 — a fixed return of about 7.1% a year for holding PT to maturity.
| Action | Outcome |
|---|---|
| Split one token, sell the YT | You hold the price with about 7.1% a year locked in. |
| Split one token, sell the PT | $2.15 now controls a full token’s dividend stream — roughly 11.8x on what the company decides to pay. |
| Hold both | Nothing changed. At maturity the PT returns the token and the YT has collected its $2.22. Merging earlier restores it exactly. |
A company that barely pays#
NVIDIA trades at $180.20 and pays about $0.04 a year. Its expected dividends to the same date come to well under a dollar, so YT prices at the floor — 0.4% of the token price, or $0.72 — rather than off its dividends at all.
PT is therefore almost the entire token at $179.48, and its fixed return is a rounding error at 0.31%. But that same floor buys roughly 250x leverage on whatever NVIDIA decides to do with its dividend.
Side by side#
| PFE | NVDA | |
|---|---|---|
| Token price | $25.40 | $180.20 |
| Annual dividend | $1.72 | $0.04 |
| Dividend yield | 6.77% | 0.02% |
| YT price | $2.15 | $0.72 |
| PT price | $23.25 | $179.48 |
| Fixed return | 7.10% | 0.31% |
| YT leverage | 11.8x | 250x |