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

[Free To Canoe]

I still got the training wheels on and only bought 300 shares. And chicken of the K-1 I stuffed it in my Roth, and will be under $1000 UBTI here this year as I pulled most of my K-1 trading shenanigans in my HSA about hit my limit there..
Long term if I get more I will have to man up and put in taxable and deal with K-1s.

Bought 600 shares of EPD for my Roth account. I guess I will be in trouble with the $1000 UBTI next year with the dividends if I don't unload some of it before then.

 

[Free To Canoe]

Ric, if conservative income is what you are looking for, I think LANDP is a great option...Even at close price of $26.03 that is still at 5.25% YTM at its 9/30/2021 date. This issue checks off so many boxes it isnt funny... Term date, escalator clause if they dont, company backed by a physical asset (land), monthly payer. Safely capitalized. I wish there were more of these...I would much rather own a 5.25% term date of just 4 years than a 6% perpetual. Yes first call date is 9/2018 but Gladstone has a rep of carrying them to edge of maturity.

"I would much rather own a 5.25% term date of just 4 years than a 6% perpetual."
Mulligan - Could you please explain why?

 

[Mulligan]

Bought 600 shares of EPD for my Roth account. I guess I will be in trouble with the $1000 UBTI next year with the dividends if I don't unload some of it before then.

Free, that may not be true and you may not have problems... The $1000 UBTI may not even be applicable...Or it may...I cant figure it out...Its too complicated and I largely gave up... Its quite possible the dividends received may not matter and you be 100% fine...But selling years down the road at a substantial profit could matter though big time. Its possible you could owe big time taxes out of your Roth which defeats the purpose of a Roth.
So the only way I 100% know I am not getting in tax trouble is to assume that $1000 number per brokerage account applies to everything ( divis, actually they arent divis and that is part of the tax problem, and or cap gains) and stay under it... But that $1000 number clearly doesnt apply to everything, but its all over my head.. As the bottom line ultimately is this...MLPs were meant to be held in taxable accounts and for long term tax efficiency were meant to be held long term... Some MLP holders have got their cost basis down to zero due to the structure of these things...I am just speaking in generalities because I dont know enough...

Aja or Coolius could speak more intelligently on these things.

 

[Mulligan]

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

"I would much rather own a 5.25% term date of just 4 years than a 6% perpetual."

Mulligan - Could you please explain why?

Well I need to clarify first... I probably should have said those worried about long term capital protection would probably be better served by the term dated issue over a 6% perpetual. But clearly I have them spread out...Some term dated and some perpetual... For someone averse to losing capital permanently the 5.25% term dated is a better risk as you know in 4 years you get $25 returned to you. Its possible in 4 years a financially leveraged company that recently issued a 6% perpetual could see their $25 par issue trade at $20 over even lower and company would never call it, so permanent capital loss could happen long term...
But if you are truly just are searching for yield and not concerned about the capital, then 6% may be more applicable. I tend to hedge and spread out a bit in all angles...Term dated, perpetual, QDI, non QDI, liquid, illiquid, extra safe coverage of divi with lower yield, and some higher yield with somewhat higher risk. I have some current sub 5% QDI perpetuals and will never sell those no matter what, but they are only a small part to the income stash.

 

[aja8888]

Well I need to clarify first... I probably should have said those worried about long term capital protection would probably be better served by the term dated issue over a 6% perpetual. But clearly I have them spread out...Some term dated and some perpetual... For someone averse to losing capital permanently the 5.25% term dated is a better risk as you know in 4 years you get $25 returned to you. Its possible in 4 years a financially leveraged company that recently issued a 6% perpetual could see their $25 par issue trade at $20 over even lower and company would never call it, so permanent capital loss could happen long term...
But if you are truly just are searching for yield and not concerned about the capital, then 6% may be more applicable. I tend to hedge and spread out a bit in all angles...Term dated, perpetual, QDI, non QDI, liquid, illiquid, extra safe coverage of divi with lower yield, and some higher yield with somewhat higher risk. I have some current sub 5% QDI perpetuals and will never sell those no matter what, but they are only a small part to the income stash.

Mulligan. Until does no include unit holders dividends. It's an internal company calculation. Don't worry. I have never triggered that $1000 and I have ,2000 shares.

 

[aja8888]

Ubti (damn spell check)

 

[Mulligan]

Ubti (damn spell check)

I knew what you meant! Until I man up and can accept dealing with
K-1 and willing to hold longer term, I will never be up to snuff on understanding the stuff involved with them. But there may come a time!

 

[Free To Canoe]

Mulligan and aja8888: Thanks for your help. I enjoy the thread and will continue to lurk.

 

[Mulligan]

Mulligan and aja8888: Thanks for your help. I enjoy the thread and will continue to lurk.

Jump in any time and often, Free! I got a very oddball trade I will talk about here in a day or two as I aint quite rapped up all the trading yet...More of an oddity thing than a great payer though.

 

[aja8888]

Jump in any time and often, Free! I got a very oddball trade I will talk about here in a day or two as I aint quite rapped up all the trading yet...More of an oddity thing than a great payer though.

One thing I figured out today is I can't post here from my phone keyboard (above post). I need my Chromebook.

 

[Mulligan]

One thing I figured out today is I can't post here from my phone keyboard (above post). I need my Chromebook.

Take some advise Aja...Go to the lawyer and bust out $350 from the ol bulging trust fund and purchase an ipad and get the app...So quick and easy...I can open up site in 3 seconds whenever I am around the thing.

 

[aja8888]

Take some advise Aja...Go to the lawyer and bust out $350 from the ol bulging trust fund and purchase an ipad and get the app...So quick and easy...I can open up site in 3 seconds whenever I am around the thing.

Wife has a $600 Ipad. She won't let me near it.

When I added the post this morning, I was in the Baylor/St. Lukes hospital ICU with DW (she had heart valve replacement surgery yesterday) and had to use my Android phone.

 

[Mulligan]

Wife has a $600 Ipad. She won't let me near it.

When I added the post this morning, I was in the Baylor/St. Lukes hospital ICU with DW (she had heart valve replacement surgery yesterday) and had to use my Android phone.

Well I hope it was successful for your wife....I know health problems arent easy...
Ok totally unrelated (but about wives) and light hearted but I know you would get a kick out of this... I was asking yesterday my 88 yr old neighbor how he met his second wife (been married about 30 years). He said he was set up to meet her at a party by a friend...Then the next thing that came out of his mouth unsolicited was....I wish I never had gone! I dont know if his intention was to make me laugh but it sure did anyways, lol....

 

[Mulligan]

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

Sold 500 shares of TCF-B at $25.35 a couple days ago...Bought 300 more today at $25.16... A call notice could be coming one never knows...But at worst call would be $25.13 or 14 so I aint worried about that and jumped back in.
My odd trade of the day was a rare stock and oddly bought from an online friend who pocketed nicely off me from a quick hold and sell.
MSEXP was the issue bought at 143.50 for 4.87% yield uncallable... However only 790 shares are in existence. It traded 100 shares at $125 this summer. First 100 share trade since 2003, yes 14 years... Online friend bought them when I fell asleep and gave up and he got them...Long story short which was interesting in itself but wont bother, but I eventually got them at the $143.50... Now many months ago I actually snagged 13 shares at $132 and sold very next day at $175 under odd circumstances... This part is key as the night after I bought MSEXP I decided to check Middlesex Water latest 10-k filing...The listed share count shrank from rounded 800 to rounded 790... Since my 13 share trade was the only trade since 93 shares in 2011 it was very clear Middlesex bought my 13 shares...And then 2011 filings clearly explained they the bought 93 shares. This is why there are only 790 shares outstanding...The old issue is uncallable and MSEX wants it cleared off their books so they buy them every chance they get. But it just doesnt trade often enough for them to do it...I highly suspect I could call them up and sell to them for $175, but I want to keep them just because I want them. I doubt there is a preferred stock in existence that has less shares outstanding than this one...Last recorded record showed 5 shareholders but that was when it had over 1000 shares left many years ago. I suspect only 2 or 3 people own any now.

 

[aja8888]

Well I hope it was successful for your wife....I know health problems arent easy...
Ok totally unrelated (but about wives) and light hearted but I know you would get a kick out of this... I was asking yesterday my 88 yr old neighbor how he met his second wife (been married about 30 years). He said he was set up to meet her at a party by a friend...Then the next thing that came out of his mouth unsolicited was....I wish I never had gone! I dont know if his intention was to make me laugh but it sure did anyways, lol....

Wife made it through the surgery but was not very happy to be awake today when I was visiting. Guess the pain blocker has worn off. So I did the right thing and brought along her 40 pound suitcase and her cell phone charger. She packed enough stuff to go to Europe for a week.

Anyway, I visited for 4 hours and headed home to deal with Harvey.

Those trades you are making remind me of playing Monopoly.

 

[Mulligan]

The extreme illiquids I have might as well be monopoly money as I will never sell them... Just permanent annuities with a sell option.... Im sure the IRS wouldnt like it, but with these extreme illiquids you could make a mint just buying and selling them out of Roth into taxable at triple the price. Then sell them back at half the price and book a nice taxable loss to offset other dividend income...Rinse and repeat... There are no market maker shares to intercept trade...Hmm, I guess they might call that stock price manipulation maybe? That might get the SEC excited too, lol...

 

[Running_Man]

It would be called tax fraud and you would get a substantial fine at a minimum and possible jail time. Sham transactions are banned by the IRS
https://blog.intltaxcounselors.com/avoid-taxes-learn-what-the-irs-teaches-auditors-about-sham-transactions/

 

[Mulligan]

Sorry, RM, I tend to understate the obvious through humor. Didnt mean to put you to work to dig up something I knew...

 

[alaska55]

Sorry, RM, I tend to understate the obvious through humor. Didnt mean to put you to work to dig up something I knew...

Yes some people are so smart

 

[Mulligan]

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

Yes some people are so smart

I was just teasing RM, Alaska, he is a good guy... But just think if we all had illiquids that no one else owned and market marker didnt possess in inventory to intercept trades....Actually I had one of my brokerages refuse to allow me to buy because it was so illiquid it could be subject to "market manipulation". But another brokerage did get them for me, CTWSO.
Anyhow....Old SEC filings are treasure of info...Over time the current filings omit a lot of good info such as amount of owners of each preferred series. I have been able to figure out indirectly MSEXP was probably issued in early 1930s or prior. An original 2500 share float with no par value, $7 annual divi that sometime later was assigned a $100 par value. The seems logical as filings state it was the original Series 1 preferred. A series 2 was later issued with a 10,000 share float 4.75% $100 with first call date of 1968. This meant is was most likely issued in 1958 since call dates and lowered call prices went in 10 year increments of 1978 and 88. They have never been called but only one person or entity owns them all and they were a private placement.
Since Series 1 was issued first and preferred rates were not as high generally as 7% after the late 20s and early 30s. Common stock has had continuous dividends since 1912...

 

[alaska55]

Mulligan I understood completely where you were coming from. It's RM who was lost he couldn't see your humor and it went right over his head.

 

[Coolius]

Thanks for the info on
NEE-H, LANDP, BPFHP and MNR-C
I am working on those.
Coolius mentioned MTB- is that worth looking at now?

RicDee,

regarding MTB-, there is about a year left to first call; you receive $63 in dividends, and at current prices would be paying $1,030 per share.

Thus YTFC - Yield To First Call - is about 3%.

There will be zero capital appreciation, as the stock price would be expected to decline to just above par as FC day approaches.

Thus, your worst case outcome, assuming a buy and hold till maturity, is a yield of 3% for the 12 months.

A positive outcome would be if the stock is not called, but continues to exist - if that should occur, you enjoy a 6% annual yield for as long as it stays outstanding.

There are definitely other stocks that could potentially provide a greater than 3% yield over the next year, so you need to consider all options in making a decision. Good Luck!

 

[Mulligan]

Sold my MH-A... About 50 cents a share holding a few weeks. Not a fan of this company anyways...Glad to be gone...

 

[jimnjana]

In the last few weeks have sold my AFSI-A and C shares. Made a nice gain on the A shares selling at par for a 16%+ gain. I had sold the common for a small percentage gain and then bought it back so back underwater on them. Sold AILLL this am at 27.13 couldn't help pulling a Mulliganish move with them. Got the last divy plus the nearly all the next divy considering the gain. So hopefully I can buy it back someday.

 

[Mulligan]

Congrats Jim! I thought hard about selling some there too... But I am trying to wall off my illiquids now and just hold. If I wasnt married to some of them I would sell. But it just has gotten to hard to get them back.