Preferred Stock Investing-The Good , The Bad and The In Between 2015 - 2020

[Mulligan]

Yes just like the common stock, it is wiping out a lot of income investors. The problem is Frontier Communications does not earn any money. My general rule is I don't buy preferred stocks of companies that are losing money. The dividend on the common stock is not sustainable. ETFs like PFF, SPFF and others own a lot of FTRPR and other convertible garbage such as SWNC. This is why I don't buy ETFs. The fund managers are playing with other peoples money and don't care about what they are buying.

Freedom, that is my beef with ETF's too. They dont look to buy quality, they look to buy liquidity to fill the big portfolio. They do not much high quality illiquid utility preferreds because they cant fill their orders with those. So what do you own beside MHNB?
I agree there is an excellent chance ALBMP will be called before end of year. But I like keeping a few of these in my portfolio because they will be good back stoppers if yields ever jump quickly. I try to keep a few of those, some call dated, adjustables if possible along with the perpetuals.

 

[aja8888]

Believe what freedom is saying about the retailers. Look at the last 12 months performance of the group and you will see that Macy's has been killed and that was thought of as the cream of the crop. The only one that has held up is Walmart. Even here in Houston, TX we are seeing top restaurants and shopping malls suffering.

 

[Mulligan]

Believe what freedom is saying about the retailers. Look at the last 12 months performance of the group and you will see that Macy's has been killed and that was thought of as the cream of the crop. The only one that has held up is Walmart. Even here in Houston, TX we are seeing top restaurants and shopping malls suffering.

I dont own any reits. I have been in and out of UBP-F. They are grocery anchor strip mall reits and run a pretty good conservative balance sheet. But the trade on it has went dead as it is a goner come this fall. And trading a divi and half above par, not enough meat here. The market is so sure F will ne called it has traded well below the G series for 6 months now and its par yield and current yield are considerably lower than F. But G is longer call protected.
I just dont follow reits very closely anyways. Almost all of my money is in taxable accounts and owning reit preferreds would kill me tax wise in taxable accounts.
You staying out of trouble Aja? Dont here from you much. I guess spending your retirement cash takes up more time than investing did.

 

[aja8888]

You staying out of trouble Aja? Dont here from you much. I guess spending your retirement cash takes up more time than investing did.

I've been laying low as DW has some serious medical problems with her COPD and osteoporosis this year. She had 4 vertebrae compression fractures and had to have them surgically repaired. She's not too mobile and pretty weak so I am doing most of the heavy stuff around here. Not what we had planned for retirement (take notice you guys and gals 10 to 20 years younger).

My portfolio still holds four preferred stocks, a few equity dividend champs and the rest is ETFs, Vanguard funds and some CDs. About a 60/40 mix with most of the 40 in cash and CDs.

 

[Freedom56]

Freedom, that is my beef with ETF's too. They dont look to buy quality, they look to buy liquidity to fill the big portfolio. They do not much high quality illiquid utility preferreds because they cant fill their orders with those. So what do you own beside MHNB?
I agree there is an excellent chance ALBMP will be called before end of year. But I like keeping a few of these in my portfolio because they will be good back stoppers if yields ever jump quickly. I try to keep a few of those, some call dated, adjustables if possible along with the perpetuals.

Hello Mulligan,

This is what I own in my taxable accounts:

It is weighted 65% medium term notes, 30% preferred stocks and exchange traded notes, and 5% REITs.

Symbol/CUSIP

EBAYL
MH-C
DLR-I
COF-F
VR-A
JPM-H
CTBB
AFC
74913EAJ9
CTW
06050WCF0
912912AQ5
36966R5N2
36966R5R3
OHI
74913EAJ9
ENH-PC
C-S
CTBB

This is what I am holding in my IRA:

It is weighted 50% medium term notes, 30% preferred stocks and exchange traded notes, 10% REITs, and 10% cash.

Symbol/CUSIP

JPM-H
ENH-PC
GOVNI
C-S
LMHA
TMK-C

156700BA3
81180WAR2

CTAA
CTBB
BAC-C

74913EAJ9
912912AQ5

MHNB
MHNC
RNR-PC
MH-C
CTU
KKR-A
EBAYL
DLR-PI
SNHNL
CTW
VR-A
OHI

 

[Freedom56]

I dont own any reits. I have been in and out of UBP-F. They are grocery anchor strip mall reits and run a pretty good conservative balance sheet. But the trade on it has went dead as it is a goner come this fall. And trading a divi and half above par, not enough meat here. The market is so sure F will ne called it has traded well below the G series for 6 months now and its par yield and current yield are considerably lower than F. But G is longer call protected.
I just dont follow reits very closely anyways. Almost all of my money is in taxable accounts and owning reit preferreds would kill me tax wise in taxable accounts.
You staying out of trouble Aja? Dont here from you much. I guess spending your retirement cash takes up more time than investing did.

I picked up OHI last week at about $30.95 average which gives a nice 8% yield. Omega Healthcare has been increasing their dividend every quarter for the past 18 quarters. They are the largest landlords for skilled nursing homes which I believe is a sector that is still growing. I would not buy retail mall REITs. They are overpriced and due for a reality check soon.

 

[Mulligan]

I've been laying low as DW has some serious medical problems with her COPD and osteoporosis this year. She had 4 vertebrae compression fractures and had to have them surgically repaired. She's not too mobile and pretty weak so I am doing most of the heavy stuff around here. Not what we had planned for retirement (take notice you guys and gals 10 to 20 years younger).



My portfolio still holds four preferred stocks, a few equity dividend champs and the rest is ETFs, Vanguard funds and some CDs. About a 60/40 mix with most of the 40 in cash and CDs.

Sorry to hear about your wife's healths issues. Hopefully things will turn for the better so she can have a quality of life in retirement that you both deserve. This has to be tough for you both. Health and life are fragile. It is a shame we cant all be like my scramble partner neighbor. We won B flight today shooting 69... He is 87. And shares the weekly 120 mile round trip driving duties. Horn always nearby and middle finger ready to hoist anytime somebody blocks the left lane not letting him pass and drive 75 mph in a 65 zone. And he has been retired since 1985...

 

[Mulligan]

I picked up OHI last week at about $30.95 average which gives a nice 8% yield. Omega Healthcare has been increasing their dividend every quarter for the past 18 quarters. They are the largest landlords for skilled nursing homes which I believe is a sector that is still growing. I would not buy retail mall REITs. They are overpriced and due for a reality check soon.

Thanks for sharing Freedom! Its funny how one can make a false assumption before having any facts...I read your above post before digging into your issues. After you mentioned OHI, I then looked at your posted issues. I didnt recognize most so I suspected . "I bet Freedom has a bunch of those crazy heart stopping high yield preferred issues"....I started digging and was certainly wrong. You definitely lean to the safer side with your ETD/Preferreds.
A nice mixture of some different sectors and fairly liquid for these issues I imagine? At least you have something to follow...Mine are snoozefests. 12 of my 16 didnt even trade today. Pretty much a normal day for me, lol.

 

[Freedom56]

Thanks for sharing Freedom! Its funny how one can make a false assumption before having any facts...I read your above post before digging into your issues. After you mentioned OHI, I then looked at your posted issues. I didnt recognize most so I suspected . "I bet Freedom has a bunch of those crazy heart stopping high yield preferred issues"....I started digging and was certainly wrong. You definitely lean to the safer side with your ETD/Preferreds.
A nice mixture of some different sectors and fairly liquid for these issues I imagine? At least you have something to follow...Mine are snoozefests. 12 of my 16 didnt even trade today. Pretty much a normal day for me, lol.

Hello Mulligan, OHI is an investment grade REIT. I bought CXW after the November election at an average of $19.20. It was trading in the low $13s just prior to the election. I sold it for $33.24 a few weeks ago and had a lot of cash around. I also owned CXW notes which I bought before the election. I sold those also as they moved well above par. There were no preferred stocks or corporate notes that were suitable so I took a chance with OHI. So far it's been okay. I'm basically in a few sectors - banks, Insurance, Industrials, Telecom, E-commerce, Data Centers, senior homes and skilled nursing care. I'm staying away from energy, materials, and retail.

 

[Mulligan]

Preferred Stock Investing-The Good , The Bad and The In Between

Hello Mulligan, OHI is an investment grade REIT. I bought CXW after the November election at an average of $19.20. It was trading in the low $13s just prior to the election. I sold it for $33.24 a few weeks ago and had a lot of cash around. I also owned CXW notes which I bought before the election. I sold those also as they moved well above par. There were no preferred stocks or corporate notes that were suitable so I took a chance with OHI. So far it's been okay. I'm basically in a few sectors - banks, Insurance, Industrials, Telecom, E-commerce, Data Centers, senior homes and skilled nursing care. I'm staying away from energy, materials, and retail.

I dont consider myself an investor. I am very studious in a select few and know the rate curves and trading yields through most I buy and their credit quality. But it mostly is to baton down the hatches. Mostly jostle around a few ute preferreds and a few others that catch my fancy off and on. Not a lot for me to do...CNIGO (term dated) CNIGP (term dated convertible with cash put) SPLP-A (term dated and cash put) FIISO (a lifetime 8.4% perpetual annuity) The Ameren ,CLP , and Connecticut Water preferreds will never be sold ever either. CFC-B is a yield steal so no hurry there. So only the others not mentioned are in play to trade.
But the vast chunk of my money is permanently tied up in the above, so no real investing plan is needed....That is the job of my pension fund manager, lol.

 

[RicDee]

Mulligan,

Of all the preferreds you own which one would be good for me, a conservative beginner, to buy now and hold for the very long term

Ric

 

[Mulligan]

Mulligan,



Of all the preferreds you own which one would be good for me, a conservative beginner, to buy now and hold for the very long term



Ric

Great question, and no perfect answer, Ric. Using parameters of absolute safety, unquestioned dividend coverage, proven 50 year track record of paying and staying above 6% minimum threshold, I would suggest CNLPL at around todays trade price of $53.20. Next divi has been declared and call price is $51.80 so little call loss exposure. Been callable since the 1970s. If you look at its 25 year price chart is takes a 5% 10 year to push it off par. In 2008-09 crisis when everything got torched it only dropped to around $43 briefly while many preferreds dropped 70-90%.
The only thing you would need to watch was periodically make sure people need electricity from a provider and all dont own some Elan Musk battery pack for electricity, lol.
But different risk levels would change which preferred is best. And there really are not any discounts going on, so the commitment to income over stock price would need to be the emphasis in buying.

 

[aja8888]

Great question, and no perfect answer, Ric. Using parameters of absolute safety, unquestioned dividend coverage, proven 50 year track record of paying and staying above 6% minimum threshold, I would suggest CNLPL at around todays trade price of $53.20. Next divi has been declared and call price is $51.80 so little call loss exposure. Been callable since the 1970s. If you look at its 25 year price chart is takes a 5% 10 year to push it off par. In 2008-09 crisis when everything got torched it only dropped to around $43 briefly while many preferreds dropped 70-90%.
The only thing you would need to watch was periodically make sure people need electricity from a provider and all dont own some Elan Musk battery pack for electricity, lol.
But different risk levels would change which preferred is best. And there really are not any discounts going on, so the commitment to income over stock price would need to be the emphasis in buying.

Offer him something he can buy easily, like CHSCM.

 

[Mulligan]

Offer him something he can buy easily, like CHSCM.

Nothing wrong with CHSCM. It doesnt have a fraction of the dividend coverage that the entire CL&P series has which is over 70 times dividend coverage and monopoly business with guaranteed regulated returns though. My bias of safety and entry point is ute preferreds as it was my entry point. But that is only my opinion, and your opinion is as good or better than mine!
I dont own any CHS now, but flipped them a few times last year and owned when a couple were IPOs. Would love to get back in them again if they drop a couple bucks.

 

[aja8888]

Nothing wrong with CHSCM. It doesnt have a fraction of the dividend coverage that the entire CL&P series has which is over 70 times dividend coverage and monopoly business with guaranteed regulated returns though. My bias of safety and entry point is ute preferreds as it was my entry point. But that is only my opinion, and your opinion is as good or better than mine!
I dont own any CHS now, but flipped them a few times last year and owned when a couple were IPOs. Would love to get back in them again if they drop a couple bucks.

One reason I recommend CHS and it's sisters is that it is a cooperative and many of the preferred owners are probably the farmers in the coop. Plus, it is Ag and diversified in that business. All good.

 

[Coolius]

Nothing wrong with CHSCM. It doesnt have a fraction of the dividend coverage that the entire CL&P series has which is over 70 times dividend coverage and monopoly business with guaranteed regulated returns though. My bias of safety and entry point is ute preferreds as it was my entry point. But that is only my opinion, and your opinion is as good or better than mine!
I dont own any CHS now, but flipped them a few times last year and owned when a couple were IPOs. Would love to get back in them again if they drop a couple bucks.

I own CHSCO, CHSCL and CHSCM, and am satisfied. They pay a good yield - mid to high 6% - and is QDI, plus call protection into 2023 or so ( i forget ). No intention of selling.

BTW, bought 200 CNLPL on the dip this morning - whoever dumped was really intent on selling - went through my bid of $53.29 like butter, didn't stop till $53.18. Still an OK yield of 6.07% with almost total safety, so no concerns there. Since redemption is $51.84, my risk exposure is $1.45, slightly less than 2 dividends. the next div has been declared, bringing my exposure down to only $0.63/share.

 

[Mulligan]

Preferred Stock Investing-The Good , The Bad and The In Between

One reason I recommend CHS and it's sisters is that it is a cooperative and many of the preferred owners are probably the farmers in the coop. Plus, it is Ag and diversified in that business. All good.

A lot of good choices...If there was only one good one, it would be bid up so much nobody would buy it and then it wouldnt be good anymore, lol.
CHS is really almost as much a energy company disguised as an ag company. I watch their prices everyday and one day hopefully soon it will be a purchase again for me!
https://www.chsdakotaplainsag.com/wp-content/uploads/2017/01/table.jpg

 

[Mulligan]

Preferred Stock Investing-The Good , The Bad and The In Between

Slow day, raining outside... So I amused myself and sold my 600 shares of ALBMP. 22 cent profit per share for owning a week... Looks like early retirement for me! Oh wait, I already am...So I sold to amuse myself and give me money to buy something else. Earlier I rounded up my lot of financial flea bag FCH-A. Got 600 of them now. Be interesting to see how long my nerves will tolerate owning this. The preferred drop recently because equally financial flea bag AHT made an offering for FCH.

 

[aja8888]

A lot of good choices...If there was only one good one, it would be bid up so much nobody would buy it and then it wouldnt be good anymore, lol.
CHS is really almost as much a energy company disguised as an ag company. I watch their prices everyday and one day hopefully soon it will be a purchase again for me!
https://www.chsdakotaplainsag.com/wp-content/uploads/2017/01/table.jpg

Having worked in the energy industry for more than 30 years, I can safely say CENEX (CHS distribution) and the two refineries (under 100 K BPD each) are a solid bet for the limited distribution network they serve and have no real exposure on a demand side. Besides selling liquid fuels, they also sell propane. They are integrated and act like a family unit and are a solid core business.

 

[Mulligan]

Having worked in the energy industry for more than 30 years, I can safely say CENEX (CHS distribution) and the two refineries (under 100 K BPD each) are a solid bet for the limited distribution network they serve and have no real exposure on a demand side. Besides selling liquid fuels, they also sell propane. They are integrated and act like a family unit and are a solid core business.

I wasnt meaning to imply it was unsafe in anyway. It has its cycles through the decades and managed just fine. It sometimes gets wrongly slapped with the title of Ag and farmers implying crops when it is so much more....Aptly titled...."The Fortune 100 company nobody has ever heard of".

 

[aja8888]

I guess I am convincing myself it's a good investment. But like you say, it's a bit cyclical in nature. Maybe I'll buy more!

 

[Mulligan]

I guess I am convincing myself it's a good investment. But like you say, it's a bit cyclical in nature. Maybe I'll buy more!

I wouldnt worry about them ( Im a nobody but I read about them a lot). My problem with all of them is just this... I got totally spoiled flipping them... The rise then sell, then fall then buy again...But lately they just sit stubborn in price. I would have been fine just holding, but I got spoiled juicing my returns flipping them. So instead of me flipping them, they have flipped me to the curb. That is the risk of playing the game, you risk not getting back in. That happened to me with KTH... I learned my lesson on the last purchase. Well I thought I did...I couldnt help myself and sold again and am now shut out there too.

 

[RicDee]

Mulligan and aja8888

Thanks for the advice
I placed an order for CNLPL

Thanks again

 

[Mulligan]

Best of luck, Ric. My only advise is be patient and dont chase. Next divi is still a ways away.

 

[Coolius]

Mulligan and aja8888

Thanks for the advice
I placed an order for CNLPL

Thanks again

All the best to you, Ric. I presume the high bid @ $53.25 could be you?
I have a bid out too, but will not compete, as mine is much lower.

I bought 200 CNLPL yesterday @ $53.25, and always looking for more at the right price.