I it possible to borrow money from a bank via a home equity loan at 6%?

Question

And then invest the money in a dividend paying stock that pays a 9% dividend and just 'pull the money from thin air' at a profit?

Answer 1

You can perhaps do that, but there are some serious risks involved. One is that the value of the stock might drop. There are very few that pay that kind of dividend. And the dividend may be cut. Another is you need to consider your after tax return. How much of the 9% will you have left after taxes. Some high dividend paying stocks are not eligible for favorable tax treatment either.

Answer 2

Most home equity loans shadow the prime rate, which is currently 8.25% Few stocks pay a 9% dividend, and the ones that do, tend to be poor investments. (The dividend is high most likely because the stock value has dropped substantially)
The risk to you is that you borrow 100k for example, and lets use your numbers at 6% and buy 100k of stock with a 9% return. Now if the stock price drops 20% in the first year, you have income of 9k and expenses of 6k, however, you have an equity of only 80k, and a debt of 100k. you made 3k, but you lost 20k, so you are now 17k in the hole.

Answer 3

Yes, as long as you're able to keep up with the loan payments.

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