Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 06-02-2016, 06:17 PM   #721
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 11,535
Quote:
Originally Posted by Slow But Steady View Post
I'm about to retire and I need to decide whether to take a lump sum or a monthly pension payment. I'm leaning toward the lump sum, since (using a discount rate of 4.5%) the breakeven for taking the monthly payout is when I'm 88.

If I take the lump sum option, I might invest 25% or so in the kinds of preferred issues we've been discussing here. Perhaps 50% might be in dividend-paying stocks and 25% in corporate bonds.

I realize it might take a few months to get invested, but does such an allocation to illiquid preferreds seem imprudent? (These percentages would be of the lump sum payout. The percentage of our overall portfolio would be maybe a tenth of that.)

Hey Slow but Steady.... I am new to the game... and there is a lot of good info on this site...

Diversification does not take a lot of work... I think you can get a good amount of diversification with 10 issues... right now I have 7... trying to get two more...

I will give some of my thoughts on this also... I am replacing my HY bond allocation with these issues... so I am looking at buy and hold for almost all of them... not that I will not sell if the price goes up enough...

It also represents about 6% of my total investments... I am not looking to have this as my income stream... just a supplement to my stock holdings... now, I might change with time and when I can actually start to take the income (well, I guess I could since all my investments are in a ROTH, but I choose not to)....

I will also say they are not as illiquid as you might think.... shares for a good number trade almost every day.... and I have never seen any without a buy or sell bid that is at least close to the current price... (close is relative... say 50 cents to be in the ball park)... so you could sell if you actually needed too.... but, I keep money in a ST bond fund for my current needs, so selling is FAR off in the future for me...

Also, it might take you awhile to get all the issue you want at a price you want... but, if you are willing to pay up a bit you can probably get everything you want in a week or so... I sit and wait... so far it has been working for me except for one issue that Mulligan says have very very little shares outstanding... seems to not trade that often, but I can wait for now...
__________________

__________________
Texas Proud is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-02-2016, 08:05 PM   #722
Full time employment: Posting here.
Coolius's Avatar
 
Join Date: May 2010
Posts: 543
Quote:
Originally Posted by Texas Proud View Post
Hey Slow but Steady.... I am new to the game... and there is a lot of good info on this site...

Diversification does not take a lot of work... I think you can get a good amount of diversification with 10 issues... right now I have 7... trying to get two more...

I will give some of my thoughts on this also... I am replacing my HY bond allocation with these issues... so I am looking at buy and hold for almost all of them... not that I will not sell if the price goes up enough...

It also represents about 6% of my total investments... I am not looking to have this as my income stream... just a supplement to my stock holdings... now, I might change with time and when I can actually start to take the income (well, I guess I could since all my investments are in a ROTH, but I choose not to)....

I will also say they are not as illiquid as you might think.... shares for a good number trade almost every day.... and I have never seen any without a buy or sell bid that is at least close to the current price... (close is relative... say 50 cents to be in the ball park)... so you could sell if you actually needed too.... but, I keep money in a ST bond fund for my current needs, so selling is FAR off in the future for me...

Also, it might take you awhile to get all the issue you want at a price you want... but, if you are willing to pay up a bit you can probably get everything you want in a week or so... I sit and wait... so far it has been working for me except for one issue that Mulligan says have very very little shares outstanding... seems to not trade that often, but I can wait for now...

On the subject of waiting for an illiquid stock to emerge from its grave, I have had open bids out for what seems like months for stocks like AILNP, AILLI and IPWLK. Nothing. So I continue to sit & wait.

The odds of reasonable pricing are better with stocks like CNLPL, CNTHP, and AILLL. But the prices for those have risen to where it is kind of frothy, so I would not add at current asking prices. One just has to wait for a seller who needs to dump, then be quick to react.

Patience is likely the watchword for this kind of strategy.
__________________

__________________
Coolius is offline   Reply With Quote
Old 06-02-2016, 08:32 PM   #723
Recycles dryer sheets
 
Join Date: May 2015
Location: Houston
Posts: 245
Thanks for the responses.

If I take a monthly payout, this pension would make up about 20% of our living expenses. Until social security starts, there is no other source of income other than what can come from the investments. That means I'm a long way from being like Mulligan and not needing the investment.

Fortunately, we've saved enough that we can get by on about a 3.5% withdrawal rate, going down to 2.5% or so after Social Security kicks in.

At this early stage, a lot of our money is in tax-deferred accounts, so I won't necessarily be looking for issues that pay qualified dividends. I think I'll get the rollover about August 1, but I'm looking at ways to get invested using some funds that are already in my various accounts. I should have been doing more of that anyway, but I'm still working, so I just don't have that much time.

Thanks again for your insights!

Slow
__________________
Slow But Steady is offline   Reply With Quote
Preferred Stock Investing-The Good , The Bad and The In Between
Old 06-02-2016, 08:33 PM   #724
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,706
Preferred Stock Investing-The Good , The Bad and The In Between

And some people like me dont have as much patience and like "shooting fish in a barrel" take the profits and go to the next best thing, and sometimes buy and flip before settlement date. Snagged some easy money this week with issues preferreds bought and sold already! Have a little but more cash to finish off, but this is my starting lineup tonight.
CVB, MNR-A, NGHCZ, CNLPL/CNTHP, AILLL/AILNP, KCC, GJP,SIVBO, EMZ, EGXKP, BGLEP, CTWSO, OSBCP, UEPCO.
Really intrigued by SIVBO, not many trust preferreds left and a juicy 6.7% yield with Moodys Baa1 backing... Bought 400 of these bad boys. Plan on putting these in the vault with my other Ameren and CLP issues. Picked off yesterday 250 of EMZ high quality A debt rated baby bond at $25.36. 5.9% plus yield for a mortgage backed bond. Hope this doesnt get called.
Bought way too many EGYXP recently, like a 1000 shares. Will pull back some after I dine and dash on the upcoming dividend as it goes exD in about 2 weeks.


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 06-02-2016, 08:43 PM   #725
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,706
Quote:
Originally Posted by Slow But Steady View Post
Thanks for the responses.



If I take a monthly payout, this pension would make up about 20% of our living expenses. Until social security starts, there is no other source of income other than what can come from the investments. That means I'm a long way from being like Mulligan and not needing the investment.



Fortunately, we've saved enough that we can get by on about a 3.5% withdrawal rate, going down to 2.5% or so after Social Security kicks in.



At this early stage, a lot of our money is in tax-deferred accounts, so I won't necessarily be looking for issues that pay qualified dividends. I think I'll get the rollover about August 1, but I'm looking at ways to get invested using some funds that are already in my various accounts. I should have been doing more of that anyway, but I'm still working, so I just don't have that much time.



Thanks again for your insights!



Slow


Starting out Texas's plan isnt too bad based on percentages. Coolius knows exactly what he is doing and has done it for many years buying and selling preferreds. Even though I do it, I hate to just say "I love it and you should do it too" and get you in a tough spot. Personally you need little investing acumen to own the Ameren and CLP, and BGE issues. They will pay come hell or high water... But what if they are called? What is the plan B? Buy something and hope? Become more of a student and learn the craft?
I will be honest they are fun to own, when people are barking about the market going up and down, it has been nothing but an investing snoozefest and collect the dividends. But if you start reaching for yield in places you can get your fingers bit off. Although it has returned back near par, AHT-D went from $25 to $16 in about a week earlier this year. Who wants to deal with that? There is a reason why...Though profitable it is up to its eyeballs in debt. If credit market locks up at wrong time on this issue, you may be screwed, or any other "low rent" preferreds which there are endless bounds of.


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 06-02-2016, 11:10 PM   #726
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 2,776
Quote:
Originally Posted by Coolius View Post
On the subject of waiting for an illiquid stock to emerge from its grave, I have had open bids out for what seems like months for stocks like AILNP, AILLI and IPWLK. Nothing. So I continue to sit & wait.

The odds of reasonable pricing are better with stocks like CNLPL, CNTHP, and AILLL. But the prices for those have risen to where it is kind of frothy, so I would not add at current asking prices. One just has to wait for a seller who needs to dump, then be quick to react.

Patience is likely the watchword for this kind of strategy.
Yep, prices too high for me right now, have had an order sitting waiting about a month for CNLPL to come down a bit.
__________________
Sunset is offline   Reply With Quote
Old 06-03-2016, 12:50 AM   #727
Full time employment: Posting here.
Coolius's Avatar
 
Join Date: May 2010
Posts: 543
I feel confident you will get CNLPL if your bid is not too low; at times a seller just pops up out of nowhere, dumps a couple thousand shares, then vanishes back into the fog.

I see bids around the low $54 at this time; this may be the floor for now, but should it go below $54, I will be a buyer again.

I think CNTHP has a better probability of swinging below $54, present ask is $54.15 not far above that level. I am also a buyer below $54 for this one.
__________________
Coolius is offline   Reply With Quote
Old 06-03-2016, 06:14 AM   #728
Full time employment: Posting here.
Golden sunsets's Avatar
 
Join Date: Jun 2013
Posts: 525
Quote:
Originally Posted by Sunset View Post
Yep, prices too high for me right now, have had an order sitting waiting about a month for CNLPL to come down a bit.
Same here. Open order on AILLL for close to 60 days.
__________________
Golden sunsets is offline   Reply With Quote
Old 06-03-2016, 06:25 AM   #729
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,706
Quote:
Originally Posted by Golden sunsets View Post
Same here. Open order on AILLL for close to 60 days.


The trouble is these issues were basically not known up until recently and Coolius and I brought them up on another income forum for safe yield starved investors. Throw in a tiny float that wasnt meant to accommodate purchasers this is what happens. So it can be frustrating.


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 06-03-2016, 10:55 AM   #730
Moderator
aja8888's Avatar
 
Join Date: Apr 2011
Location: The Woodlands
Posts: 5,639
Quote:
Originally Posted by Mulligan View Post
The trouble is these issues were basically not known up until recently and Coolius and I brought them up on another income forum for safe yield starved investors. Throw in a tiny float that wasnt meant to accommodate purchasers this is what happens. So it can be frustrating.


Sent from my iPad using Tapatalk
Curious as to what the other income forum you guys frequent?
__________________
......."Everybody has a plan until they get punched in the face." -- philosopher Mike Tyson.
aja8888 is offline   Reply With Quote
Old 06-03-2016, 11:38 AM   #731
Full time employment: Posting here.
Coolius's Avatar
 
Join Date: May 2010
Posts: 543
Another nice price bump for old favorite WFC-L. Up another $7.99 this morning.

This is my largest holding dollar wise ( kind of amusing that it is the lowest qty holding in my portfolio ), but it's kind of high right now so will not add.

From a yield perspective, it is still a good yield in the high 5's low 6's percent, so it still compares well with other Financial Preferreds from investment grade banks.

( I should have bought more at $1,167 last year, but was too scared at the time to commit more funds. )
__________________
Coolius is offline   Reply With Quote
Old 06-03-2016, 08:03 PM   #732
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 106
Quote:
Originally Posted by Sunset View Post
Then he needs to "invest in gold" to take it with him..

http://cebudailynews.files.wordpress...02911jhm48.jpg
Only in the Philippines LOL
__________________
alaska55 is offline   Reply With Quote
Old 06-05-2016, 07:23 AM   #733
Recycles dryer sheets
 
Join Date: May 2015
Location: Houston
Posts: 245
I see that SSW-C, mentioned here a few months back, has been called. Mulligan and Coolius, are you still holding it?
__________________
Slow But Steady is offline   Reply With Quote
Old 06-05-2016, 08:26 AM   #734
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,706
Quote:
Originally Posted by Slow But Steady View Post
I see that SSW-C, mentioned here a few months back, has been called. Mulligan and Coolius, are you still holding it?


No, we both dumped. They had to be called by January 2017, or face a 25% penalty in increased payments to preferreds. We both bought when they sagged under $24, then when they quickly recovered to over par we sold. We neither ever meant it to be a long term hold.. I dont classify any shipper as a safe keeper, though Seaspan is one of the safer ones. The debt these companies have is incredible. Plus the value of their entire preferreds was over HALF the amount of the float of the common stock. And this isnt even counting all of the massive debt encumbered which sits above the preferreds in priority. Too much a cyclical debt ridden industry for me to invest in.


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 06-05-2016, 12:32 PM   #735
Full time employment: Posting here.
Coolius's Avatar
 
Join Date: May 2010
Posts: 543
Quote:
Originally Posted by Mulligan View Post
No, we both dumped. They had to be called by January 2017, or face a 25% penalty in increased payments to preferreds. We both bought when they sagged under $24, then when they quickly recovered to over par we sold. We neither ever meant it to be a long term hold..

Sent from my iPad using Tapatalk
Yep, what Mulligan said. A quick flip, a few $$ for lunch with the missus, and we move on....

Harder now to find good deals on Preferred/ETD issues. The poor jobs report, plus rest of the world in economic distress, plus uncertainties from Brexit, etc - make me feel that we'll be in a low interest rate environment much longer than Wall Street thinks.

That will - unfortunately - keep our favorites at elevated price levels and not-so-attractive yields.

I'm now forced to seek out opportunities in the mid 5% yields - thought it would not ever come to this; but as Bob Dylan sang - " the times, they're a-changing "
__________________
Coolius is offline   Reply With Quote
Old 06-06-2016, 02:36 PM   #736
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 11,535
Well, thought I was going to miss it.... but was lucky and got the trade...

BGLEI sold for $104.20 earlier today.... I had an order in for $104.80 but cancelled it to go after another...

THEN, my internet was SLOW... I mean glacial slow.... but, finally got in an order and it closed!!!

So, got a position in this... now I have my full amount invested.... final result is 7.32% yield with a weighted BB+ rating (note, I put in a B rating on the issues that were not rated...

Now, have to work on selling MNR-PA in the next 4 months and deciding what I want to replace it with...


Ut OH... just looked and saw that it is being called!!!

Not a good thing then....
__________________
Texas Proud is offline   Reply With Quote
Old 06-06-2016, 02:38 PM   #737
Recycles dryer sheets
 
Join Date: May 2015
Location: Houston
Posts: 245
There's a lot of the Baltimore Gas preferreds being traded today. Especially BGLEP, but they are all trading some. I wonder what's going on...
__________________
Slow But Steady is offline   Reply With Quote
Old 06-06-2016, 02:40 PM   #738
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,706
You are looking at wrong BGE issues...a massive sell in BGLEP and BGLEN... I went big...Buying almost 400 shares between the two..free dividend in 2 days... Im taking call risk at $102.64.... NO regrets...Im in big now with them...still selling if your frisky!!!!


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Preferred Stock Investing-The Good , The Bad and The In Between
Old 06-06-2016, 02:43 PM   #739
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,706
Preferred Stock Investing-The Good , The Bad and The In Between

Quote:
Originally Posted by Slow But Steady View Post
There's a lot of the Baltimore Gas preferreds being traded today. Especially BGLEP, but they are all trading some. I wonder what's going on...


I went for it...No regrets... A year ago massive institutional selling occurred and I bought and flipped 300 shares twice in month with big $5 gains on each share...yep, it could get called and I accept that as realty...don't get many shots for 6.5 % absolute safe dividends... I am big...Gladly risk 75 cents for a perpetual beauty like this one....
BGLEP and BGLEN are the two... Remember call risk!

Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 06-06-2016, 02:46 PM   #740
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 11,535
On June 3, 2016, Baltimore Gas and Electric Company issued a notice of redemption for all of the outstanding shares of its 7.125% Cumulative Preference Stock, 1993 Series (CUSIP No: 059165779) and 6.99% Cumulative Preference Stock, 1995 Series (CUSIP No: 059165761) on July 3, 2016 (the Redemption Date), at a redemption price of $100.00 per share, plus the amount equal to all accrued and unpaid dividends on each share of each of the foregoing series of preference stock from July 1, 2016 up to, but not including, the Redemption Date.
__________________

__________________
Texas Proud is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Preferred or not preferred lja0703 Stock Picking and Market Strategy 19 02-19-2015 10:52 AM
Fixed to Float Preferred Stock Richard4444 FIRE and Money 5 11-04-2013 06:43 AM
Choosing Between Pre-tax and After-tax Investing ClockWatcher Hi, I am... 10 05-09-2013 08:05 PM
How to sell individual Municipals and Preferred stock JB Stock Picking and Market Strategy 5 12-27-2007 03:28 PM
Third Party Preferred Stock Tony Tampa FIRE and Money 1 04-25-2006 03:47 PM

 

 
All times are GMT -6. The time now is 11:42 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.