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

[Freedom56]

And after a few very quiet and upward creeping price movements, the downward spike could get unnerving to some not familiar. Calls wont bother me, but getting caught with a low yielder and getting hammered capital wise would. Thus the urge to hide out in these rare higher yielding ones staring at a call with some meat on the bone still.

As a rule, I don't buy above par and avoid the low yielders. You should consider CTW if it drops below par. They called 50% in September.

 

[Freedom56]

A lot of funds selling off preferred stocks and exchange traded notes today. I have been picking some of them up. I bought SNHNL at 24.15. CTX at 24.90. Eventually people will realize that 1% in a savings account or near zero in a brokerage account goes nowhere.

 

[Mulligan]

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

A lot of funds selling off preferred stocks and exchange traded notes today. I have been picking some of them up. I bought SNHNL at 24.15. CTX at 24.90. Eventually people will realize that 1% in a savings account or near zero in a brokerage account goes nowhere.

Are you comfortable with Quest's finances? I just havent been able to zero in on them or the sector. I kind of fearfully lump them in with Frontier which probably isnt fair but I dont know if I trust them. But if they keep dropping I may learn too, lol.

 

[Sunset]

I just picked up 400 (more) shares of ALLY-P at $24.99

It's floating rate currently at: 6.6 %

 

[Sunset]

MHNB really sold off on 7 times daily volume. Has to be an institution. Common up 5% today and debt rating this fall upgraded and MHNB was already investment grade to begin with. Bought 500 more shares right at par at market close... Very pleased with that... Had to sell off UBP-F at a 20 cent profit bought last month and my RNR-C at cost to get them. But in return I got two 50 cent divis guaranteed before call in March. A great place to hide out next 4 months to see if yields move up.

I picked up 200 of MHNB at $25.26 , following your example.

 

[RE2Boys]

Seems a lot of what many consider "income" investments are really dropping since the election..........growth investments looked upon as a better investment or is the drop in perceived anticipation of serious rise in interest rates (and/or inflation).

CHSCM is getting back into buying territory, same with MNR-C, utilities also dropping.
Picked up some MNR-C yesterday but just before the end of session dive.

 

[Texas Proud]

Well, my divi snatching is not going so well....

Bought my last stock while trying to get ready to go on vacation.... bought it way too early.... it went ex divi the Fri before we left.... so I placed a sell order... SOOO, on vacation for 12 days and it kept dropping... and the election results seems to not have helped...

Will likely drop $1,000 as a loss with $300 divi... but, this is a learning process and I hope to not make the same mistakes going forward...


One of the problems is that a good number of these just do not trade often.... right now I am trying to do shares that pay 2 divis a year and there just are not that many that pay a good divi....

Will update as I go...

 

[Mulligan]

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

I picked up 200 of MHNB at $25.26 , following your example.

A very safe play... In an environment where preferreds are sagging, buying one that more than likely will kick you out 74 cents profits for holding 4.5 months and then a call is almost a no brainer. And if they do not? Not many 8% par investment grade issues on the market, so I wont be mad if they dont.

RE... I have a few CHS issues on my tracker list but the one you mentioned I hadnt tracked. Yes, its relative value appears a lot better. Plus that adjustable rate kicker over 4% in 2024 serves as a nice ballast for a long term hold and forget. Most people should look at what their issues were trading at 12 months ago. This is where they are likely heading if they havent got there yet.

 

[Mulligan]

Texas, those JC Penny ETD pay a mighty handful is you are brave! That is funny how you want the twice a year payers...Coolius and I were just complaining to each other about twice a year payers this week. No logic behind the complaint. Just greed to collect quarterly divis I guess.

 

[Texas Proud]

Texas, those JC Penny ETD pay a mighty handful is you are brave! That is funny how you want the twice a year payers...Coolius and I were just complaining to each other about twice a year payers this week. No logic behind the complaint. Just greed to collect quarterly divis I guess.

It is trying to get max income on the shares....

You buy a stock and hold till ex divi... wait for it to recover to buy the next... if you do qtrly pay you only get 1/2 the divi of a semi pay... you can only turn over the money a certain amount of times per year, so semi is better than qtrly for this methodology.....

My first two turns I made money on very short trades... 8 days and 2 days.... but this was 21 days and I got burned... still, I think I can do better than just buy and hold.... we will see... I am keeping track of each trade and weighting it based on how much invested and days held...

 

[jim584672]

WFC-L is down almost $100 in ten days. Everything is getting hammered. The prices are starting to get attractive again.

 

[Mulligan]

Texas, I couldnt help myself....Bought 200 shares of JBR at $17.58.... Chump change... My fingers could not be contained and they bought these without my permission!

 

[Running_Man]

WFC-L is down almost $100 in ten days. Everything is getting hammered. The prices are starting to get attractive again.

Interesting clear that since the incoming President has made it clear he thought rates were artificially low that rates are increasing across the board. This election though has not at all changed the deflationary impact of what is occurring in the marketplace but it certainly has broke through for an expectation impact, so it is almost certain the FED will increase interest rates in December. I find it doubtful that the economy can actually withstand the impact of this rate increase. 20% of my five year fixed income is due at the end of the year so I should get a bump in interest rates from this increase in rates, hopefully they hold. WFCPL is taking a huge hit although the common is now one of the most recovering stocks. Can’t say how low the preferred may go but I think the risk on payouts has dropped dramatically at the same time the preferred stock price has dropped.

 

[Freedom56]

Are you comfortable with Quest's finances? I just havent been able to zero in on them or the sector. I kind of fearfully lump them in with Frontier which probably isnt fair but I dont know if I trust them. But if they keep dropping I may learn too, lol.

Qwest is part of Centurylink which is merging with Level 3. They have more than sufficient income to cover the interest payments. I own CTW, CTX, CTU and CTAA. I also own Centurylink 2024 Notes that have a coupon of 7.5%. Centurylink makes money. Frontier is a money loser. I also have Qwest 2031 notes that pay 7.6%. My average yield in my portfolio is about 7.1% in my IRA and 6.8% in my taxable accounts. I don't plan to withdraw from my IRA until I'm 70 (another 13 years). If I can manage a 7% return for the next 13 years My capital will be 2.4 times what it is today. I sweep up interest from my taxable account into a money market savings account that pays a whopping 0.9% until I find something worth investing in.

 

[Winemaker]

I believe the current <2% growth rate, low"official" inflation rate, and low interest rates forced many of us, including me into preferreds and divvy stocks. Now after the election, with some real possible growth policies, investors are taking a chance on this possible growth by selling their preferreds and bonds. My opinion, of course, take it with some salt.

That said, I'm glad I stopped reinvesting divvies in my PGX and some other way over par preferreds in June. I sold most of my PGX a few weeks ago, something just didn't feel right. My preferred portfolio is down $6,000 from it's recent peak, but I'm still up $10,000 from my basis in October 2014.

Recently, I've picked up some AHT, ARR, MDLY, PSA and even some MNR preferreds way, way under par in 200 share increments. Not really worried about default, just collect divvies until called, if ever.

 

[Freedom56]

Today's buys

LMHA 24.85 (Legg Mason 6.35% notes)
CTX 24.80
GOVNI 22.85
SNHNL - 24.20

Plan to do more shopping tomorrow.

 

[Mulligan]

I believe the current <2% growth rate, low"official" inflation rate, and low interest rates forced many of us, including me into preferreds and divvy stocks. Now after the election, with some real possible growth policies, investors are taking a chance on this possible growth by selling their preferreds and bonds. My opinion, of course, take it with some salt.

That said, I'm glad I stopped reinvesting divvies in my PGX and some other way over par preferreds in June. I sold most of my PGX a few weeks ago, something just didn't feel right. My preferred portfolio is down $6,000 from it's recent peak, but I'm still up $10,000 from my basis in October 2014.

Recently, I've picked up some AHT, ARR, MDLY, PSA and even some MNR preferreds way, way under par in 200 share increments. Not really worried about default, just collect divvies until called, if ever.

Winemaker, am I correct to assume your money amount does not include the dividends that were paid out to you since they are not reinvested?
I bought 5 shares of WFC-L at $1212 and the finger punching without permission purchased JBR today. My core illiquids will never be sold and they rarely trade anyways... But, they fall into my 6% theory. Historically unless we are talking about early 80s or late 90s rates, 6% plus investment grade over time will hold up fine... Or at least history has shown that. My bar for yield is lower though. But not so low as in 5% issues that get rocked in these periods.
I have largely side stepped any losses, a bit through nimble trading staying ahead of the posse and mostly just because they havent traded in weeks, ha. I expect eventually some price sagging there too. Its inevitable and I dont worry. In my mind I think AILLL is a $25.75 stock not $26.40. The difference is just a near term price spike from rates too low too long this past year.

 

[Mulligan]

Qwest is part of Centurylink which is merging with Level 3. They have more than sufficient income to cover the interest payments. I own CTW, CTX, CTU and CTAA. I also own Centurylink 2024 Notes that have a coupon of 7.5%. Centurylink makes money. Frontier is a money loser. I also have Qwest 2031 notes that pay 7.6%. My average yield in my portfolio is about 7.1% in my IRA and 6.8% in my taxable accounts. I don't plan to withdraw from my IRA until I'm 70 (another 13 years). If I can manage a 7% return for the next 13 years My capital will be 2.4 times what it is today. I sweep up interest from my taxable account into a money market savings account that pays a whopping 0.9% until I find something worth investing in.

Interesting Freedom. It will give me something to check out.

 

[Winemaker]

Winemaker, am I correct to assume your money amount does not include the dividends that were paid out to you since they are not reinvested?

I normally take the divvies and reinvest them in another issue; I try to limit my exposure to no more than 200 shares each. However with PGX, an ETF, I allowed the divvies to reinvest. I also allowed a Merrill Lynch Trust Preferred to reinvest over the years; after my June divvy stoppage, it was called in September. It's all been dumb luck on my part.

 

[Mulligan]

I normally take the divvies and reinvest them in another issue; I try to limit my exposure to no more than 200 shares each. However with PGX, an ETF, I allowed the divvies to reinvest. I also allowed a Merrill Lynch Trust Preferred to reinvest over the years; after my June divvy stoppage, it was called in September. It's all been dumb luck on my part.

You were allowed the opportunity to reinvest in the Merril trust preferred? Interesting, I dont have an issue that allows that.

 

[Winemaker]

Yes, MERprM 6.45%, and I still have some MERprK 6.45%, no longer reinvesting divvies.

 

[Mulligan]

Winemaker, I had MER-K for a few weeks until last week. I planned on keeping until the call. But I had to sell as my rare chance to load up on HE-U on a sell off was there so I had to let it go.

 

[Slow But Steady]

Today I sold a bite of AHT common at $6.21 that I had bought two months back at $5.91. I was tempted to buy more of the D-preferred which was selling for $24.67 at the time, but I think I already have enough of my future grocery money tied up in that one company.

Since the election, I've also sold covered calls on CAT, LyondellBasell (my former employer) and GM, and closed out some cash covered put positions in CAT, Union Pacific, and Abbvie.

Lots of thrashing around in the markets since Tuesday night.

 

[Henry Lili]

A $25 limit order I had placed on Bluerock triggered today. Not too long ago it was trading at $28.

Sent from my LGL34C using Early Retirement Forum mobile app

 

[Mulligan]

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

Anybody own any issues that got taken behind the woodshed for a beating? I actually am up for the week. Unloading some earlier in week and selling some AILLL into a high bid along with a few hundred of my water preferred at a nice purchase profit. Outside of my Amerens my largest individual positions by far is MHNB and WFC-J. Bought WFC-J several times as it traded to $26.77 and eventually loaded up hard on it. Pretty self apparent why I bought an extensive amount of those two issues. Still hanging on to near 15% gains and that is my goal to keep it until the new year.