Preferred Stock Investing-The Good , The Bad and The In Between 2021

[Texas Proud]

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Originally Posted by Mulligan Bob, Its hard to pull the trigger much and Im trying…But it seems likely if we buy some of these quality issues that are in mid teens now and trading near 8% will get rewarded at some point. When or ever? Who knows, but I feel compelled to dip a few toes in these.

Might be just me but an 8% return is good enough for me... any gain is just gravy...

[Mulligan]

Quote:

Originally Posted by Texas Proud Might be just me but an 8% return is good enough for me... any gain is just gravy...

Tex, hey I love 8% too! I will just have to accept market present jitteriness and not get worked up if it bounces down.

[Mulligan]

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Originally Posted by pb4uski OK, so help me out here. ALL-G has an announced call on 4/17. As I understand it on 4/17, I would receive $25.35 for each share, right? Current price is $25.20. So a 15c profit over 31 days if I bought today and it settles on 3/17, annualized that is $1.77 and divided by $25.20 that is a 7% yield for 31 days. What am I missing? tIRA so no tax implications.

Sorry, PB, I missed this. It goes ExD end of month at about 50 cents. Its a 7.99% payer this quarter. And since they havent given a 30 day notice yet, it the full payment is in the bag now and would be accruing next quarter a few days even if called today.

[bobandsherry]

Quote:

Originally Posted by Mulligan Sorry, PB, I missed this. It goes ExD end of month at about 50 cents. Its a 7.99% payer this quarter. And since they havent given a 30 day notice yet, it the full payment is in the bag now and would be accruing next quarter a few days even if called today.

Hey Mulli, he was asking about "G", that's been called for 4/17. He was looking to pickup some free nickels. I believe you confused with "B".

[Mulligan]

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Originally Posted by bobandsherry Hey Mulli, he was asking about "G", that's been called for 4/17. He was looking to pickup some free nickels. I believe you confused with "B".

Duh, thanks, Bob. Yep Im way off base. I got B fever. I bought a few hundred more today. I tend to buy more when I sell something and want to keep myself out of trouble.

[Mulligan]

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Originally Posted by Winemaker You're learning from Mully!

I keep forgetting to ask, are you producing any nice vintage batches of wine this year, Winemaker?

[Winemaker]

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Originally Posted by Mulligan I keep forgetting to ask, are you producing any nice vintage batches of wine this year, Winemaker?

While they're not sweet like you like them, I have a barrel of Sangiovese that has another 7 months to go, and a Barbera that went into a barrel for 11/2024.

I like to think they're all great vintages but my best was my 2019 Petite Sirah.

Cheers to you, Grid/Mully!

[pb4uski]

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Originally Posted by Mulligan Duh, thanks, Bob. Yep Im way off base. I got B fever. I bought a few hundred more today. I tend to buy more when I sell something and want to keep myself out of trouble.

Yes, I was asking about the G looking to pick up some free nickels but I'm glad that you mentioned the B. We have some but I forgot about it and DMs IRA had a little money in it that I was wondering what to do with so I bought some of the B..

[ownyourfuture]

In July 2021, tired of seeing what the money market in my HSA was paying, I did something that turned out to be incredibly stupid. Started dollar cost averaging into S&P Investment Grade Preferred ETF (EPRF)

My total return is -18% & it's also the largest individual holding in the account (14%)

After today, the preferred index is sitting very near the March 2020 5 year low.



The only decision I've made is not to invest any 'new' money.

If you were in a similar position, would you ?

A-Sell
B-Hold & continue to DRIP
C:Hold & take dividends in cash.

My gut says anything other than A. Why sell something that's at a 5 year low ?

[Mulligan]

Quote:

Originally Posted by ownyourfuture In July 2021, tired of seeing what the money market in my HSA was paying, I did something that turned out to be incredibly stupid. Started dollar cost averaging into S&P Investment Grade Preferred ETF (EPRF) My total return is -18% & it's also the largest individual holding in the account (14%) After today, the preferred index is sitting very near the March 2020 5 year low. The only decision I've made is not to invest any 'new' money. If you were in a similar position, would you ? A-Sell B-Hold & continue to DRIP C:Hold & take dividends in cash. My gut says anything other than A. Why sell something that's at a 5 year low ?

Unfortunately this fund is in the wrong sector at the wrong time. The “preferred universe” is close to 80% financials and yet this fund is 90%. And the financials have just been pummeled recently from the “bank crisis”. Many are so far down, one would think if you have a longer time horizon these specific preferreds will bounce back. It may be on the other side of a recession if we have one. You have the benefit of it not having single entity concentration risk. It may get worse… But timing these things in and out and back in is problematic also.

[Texas Proud]

Quote:

Originally Posted by ownyourfuture In July 2021, tired of seeing what the money market in my HSA was paying, I did something that turned out to be incredibly stupid. Started dollar cost averaging into S&P Investment Grade Preferred ETF (EPRF) My total return is -18% & it's also the largest individual holding in the account (14%) After today, the preferred index is sitting very near the March 2020 5 year low. The only decision I've made is not to invest any 'new' money. If you were in a similar position, would you ? A-Sell B-Hold & continue to DRIP C:Hold & take dividends in cash. My gut says anything other than A. Why sell something that's at a 5 year low ?

I would think you were investing this for yield... and a good yield at the time... as far as I know you will still be getting the dividend you bought...


I would just hold on and either DRIP it back if I did not need any cash or take the cash if I was burning cash...

[ownyourfuture]

Thanks for the replies.
Since I don't need the cash, I'll let it ride & continue to reinvest the dividends.

[Mulligan]

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Originally Posted by ownyourfuture Thanks for the replies. Since I don't need the cash, I'll let it ride & continue to reinvest the dividends.

Since its very diversified in the amount of holdings time is on your side if you have no problem as a long term hold. As Tex said it could be a good reinvestment candidate to lower your cost basis over time.

[Montecfo]

Mulligan,

Where can I find more info on KTN and KTH?

thanks for all you do.

[Winemaker]

Quantumonline.com

[Mulligan]

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Originally Posted by Montecfo Mulligan, Where can I find more info on KTN and KTH? thanks for all you do.

Hey Montecfo. Really all you need to know is these issues simply have subordinate debt held inside a trust wrapper. KTH is simply the PECO 2028 subordinated debt held inside it. It redeems at $27.10 simply because brokerage bought the bonds way back when under par and you receive the cap gain at maturity. This means however there is some “phantom tax on that portion of the issue. I dont own KTH now, but I do actually own the 2028 Bond.

https://finra-markets.morningstar.co...&symbol=EXC.JA

KTN is the same with a 2027 AON subordinate bond held in it.

https://finra-markets.morningstar.co...bol=AON3675835

It doesnt have any phantom tax and redeems at $25. I have seen the actual bond trade several times but minimum amount was 250 shares, that is over a quarter mil. Too rich for my blood.

[Montecfo]

thanks, very helpful.

[Mulligan]

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Originally Posted by Montecfo thanks, very helpful.

Added thought… The only risk to these issues is the actual companies. The KTH and KTN are simply certificates that lay claim to the actual bonds held inside their trusts. US Bank I believe holds the bonds. They were synthetically created baby bonds when baby bonds didnt exist and brokerages had to create them for smaller investors.

[Texas Proud]

OK... looking for some recommendations for some variable yields...


I have money from a 401(k) transfer and want to get some pref shares while I wait for the market to correct (if it ever does)... the 4.5 or so in MM funds is pretty good but would like to get some more...


I did buy a bit of CUBI back when someone mentioned it but did not buy that much.. opps... just saw I bought more in my ROTH account but not the cheap price... at $25...


So, have these holding right now


ALL B
CPN
JPM K
GLP A
NSS
SPLP A

[Mulligan]

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Originally Posted by Texas Proud OK... looking for some recommendations for some variable yields... I have money from a 401(k) transfer and want to get some pref shares while I wait for the market to correct (if it ever does)... the 4.5 or so in MM funds is pretty good but would like to get some more... I did buy a bit of CUBI back when someone mentioned it but did not buy that much.. opps... just saw I bought more in my ROTH account but not the cheap price... at $25... So, have these holding right now ALL B CPN JPM K GLP A NSS SPLP A

Here is one that doesnt float until 1/2025 but is kicking out some shares under $95. CKNQP. This is a bank preferred from CoBank one of the 50 safest banks in the world with preferred rated BBB+. United States only has 4 banks on the list and they are all Ag Bank related which means they are sisters to CoBank. They are not a bank that accepts deposits so they arent exposed to any of this current bank crisis.
Watch SPNT-B. I recently bought at $22 and its over $23 already. The common stock is bouncing around 52 week highs and they just got their credit rating reaffirmed. It has a very juicy reset when it starts floating down the road.