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

[Gumby]

With a new year, we're starting new versions of our long running threads so that they will load faster. Here is the link to Preferred Stock Investing-The Good , The Bad and The In Between 2015 - 2020 https://www.early-retirement.org/for...0-a-77428.html

[bobandsherry]

Quote:

Originally Posted by Gumby With a new year, we're starting new versions of our long running threads so that they will load faster. Here is the link to Preferred Stock Investing-The Good , The Bad and The In Between 2015 - 2020 https://www.early-retirement.org/for...0-a-77428.html

Perhaps you could add a final message in the previous thread that has link to this new thread?

[bobandsherry]

As expected: National General Announces Notice to Redeem Certain of its Securities and Intention to Delist and Deregister its Series C Depositary Shares

National General Holdings Corp. (Nasdaq: NGHC) (“National General” or the “Company”), a wholly owned subsidiary of The Allstate Corporation, today delivered notices of redemption to, on February 3, 2021 (the “Redemption Date”), redeem in full:

• all of the issued and outstanding shares of its 7.50% Non-Cumulative Preferred Stock, Series A (par value $0.01 per share) (CUSIP No.: 636220709) (collectively, the “Class A Preferred Stock”), at a redemption price equal to $25.00 per share plus declared and unpaid dividends on the shares of Class A Preferred Stock called for redemption for prior dividend periods, if any, plus accrued but unpaid dividends (whether or not declared) thereon for the then-current dividend period, to, but excluding, the Redemption Date, without accumulation of any other undeclared dividends;

• all of the issued and outstanding Depositary Shares, Representing 1/40th of a Share of its 7.50% Non-Cumulative Preferred Stock, Series B (CUSIP No.: 636220808) (collectively, the “Class B Depositary Shares”) and the underlying 7.50% NonCumulative Preferred Stock, Series B (par value $0.01 per share) (CUSIP No.: 636220881) (collectively, the “Class B Preferred Stock”), at a redemption price equal to $25.00 per Class B Depositary Share (or, as applicable $1,000 per share of Class B Preferred Stock) plus declared and unpaid dividends on the Class B Depositary Shares (or shares of Class B Preferred Stock, as applicable) called for redemption for prior dividend periods, if any, plus accrued but unpaid dividends (whether or not declared) thereon for the then-current dividend period, to, but excluding, the Redemption Date, without accumulation of any other undeclared dividends; and

• the aggregate outstanding principal amount of its 7.625% Subordinated Notes Due 2055 (the “2055 Notes”), in increments of $25 aggregate principal amount of the 2055 Notes, at a redemption price equal to 100% of the principal amount of the 2055 Notes being redeemed plus accrued but unpaid interest to, but not including, the Redemption Date (collectively, the “Redeemed Securities”).

The Class A Preferred Stock, Class B Depositary Shares, 2055 Notes and Class C Depositary Shares are currently traded on Nasdaq under the symbols NGHCP, NGHCO, NGHCZ and NGHCN, respectively.

Source: https://ir.nationalgeneral.com/news-...its-securities

[Gumby]

Quote:

Originally Posted by bobandsherry Perhaps you could add a final message in the previous thread that has link to this new thread?

When I did a mass creation of new threads on New Years Day, I tried to include that message, but obviously missed this thread. Thanks for catching it.

[Happyras]

So, doing the math on NGHCO or NGHCP. The record date of the most recent dividend is Jan 1. So I assume dividends will still accrue for 30 days. The shares are trading at 25.07 today with redemption at 25 plus the dividend through Feb 2 at 0.46875 x 31/91=$0.16. Should the share price be more like 25.16? Is there that much time risk in holding the shares? Or is my math wrong?

This implies if you could buy a share today @25.08, in 30 days you would receive 25.16. That is an annual rate of return of 3.8%?

[pb4uski]

Interesting... my experience with my called shares has been the opposite... right after the call they are trading at the amount to be received on the call date less a penny or two.... I usually sell at that level and move on to greener pastures.

[Texas Proud]

Quote:

Originally Posted by Happyras So, doing the math on NGHCO or NGHCP. The record date of the most recent dividend is Jan 1. So I assume dividends will still accrue for 30 days. The shares are trading at 25.07 today with redemption at 25 plus the dividend through Feb 2 at 0.46875 x 31/91=$0.16. Should the share price be more like 25.16? Is there that much time risk in holding the shares? Or is my math wrong? This implies if you could buy a share today @25.08, in 30 days you would receive 25.16. That is an annual rate of return of 3.8%?

Did not look but probably 90 days...


I was a corporate trustee for a few years and all of the ones I ever saw had a 360 day year, or 4 90 day quarters....

[Happyras]

Quote:

Originally Posted by Texas Proud Did not look but probably 90 days... I was a corporate trustee for a few years and all of the ones I ever saw had a 360 day year, or 4 90 day quarters....

Good catch, I have a corporate note which uses 360 days/yr for int. rate.

So if you bought today at 25.08, you would receive 1/3 of the div from Jan 1-Feb 2, about 33 days of 90, with quarterly rate of 0.46875. About 0.17 accrued div plus the 25 bucks. .09 cents in 33 days on 25.08 invested annual yield=essentially 4% net return. Pretty certain return for a 4 % yield, or are the tricky lawyers involved and the accrued dividend will somehow not be paid

[pb4uski]

Annual dividends are $1.88... and next div is paid on 1/15... so wouldn't the terminal dividend only be for 1/16-2/3?... that is 18 days... $1.88/360*18 would be ~9c... so $25.09 and then a slight haircut for the time value of money makes $25.07 seem sensible.

[Happyras]

Quote:

Originally Posted by pb4uski Annual dividends are $1.88... wouldn't the terminal dividend only be for 1/16-2/3? that is 18 days... $1.88/260*18 would be ~9c... so $25.09 and then a slight haircut makes $25.07 seem sensible.

A very good question, but the ex-dividend date was in Dec and the Record date was Jan 1. Just because it is paid on the 15th, to holders of record on Jan 1, doesn't mean the div was through the Jan 15th. I still think there is a 4% opportunity here, but for a very short time.

[pb4uski]

I'd bet that you are wrong.

My understanding is that the 47c quarterly dividend is for the period ended 1/15 (or 4/15, 7/15 or 10/15) but is paid to shareholders of record on 1/1, 4/1, 7/1 or 10/1) and the ex date is a day after the record dates. So someone buying today will not receive the 47c dividend that will be paid 1/15 because it is already ex but will receive the final dividend on 2/3... which I think will be ~9c.

[Happyras]

Quote:

Originally Posted by pb4uski I'd bet that you are wrong.

Whats your wager? I'm up for a ski day or even a pint!

[pb4uski]

A pint sounds good, the trails here in Florida are really boney.

[Happyras]

Well, I hope I get to buy you that pint soon! I actually agree with your read on this, it makes sense.

[Mulligan]

Quote:

Originally Posted by pb4uski I'd bet that you are wrong. My understanding is that the 47c quarterly dividend is for the period ended 1/15 (or 4/15, 7/15 or 10/15) but is paid to shareholders of record on 1/1, 4/1, 7/1 or 10/1) and the ex date is a day after the record dates. So someone buying today will not receive the 47c dividend that will be paid 1/15 because it is already ex but will receive the final dividend on 2/3... which I think will be ~9c.

PB, you are correct, the next payments accrues from the payment date. People get thrown off by that. And this being a very liquid issue, the market knows this and aint tossing no freebees.

[caren22]

Quote:

So, doing the math on NGHCO or NGHCP. The record date of the most recent dividend is Jan 1. So I assume dividends will still accrue for 30 days. The shares are trading at 25.07 today with redemption at 25 plus the dividend through Feb 2 at 0.46875 x 31/91=$0.16. Should the share price be more like 25.16? Is there that much time risk in holding the shares? Or is my math wrong? This implies if you could buy a share today @25.08, in 30 days you would receive 25.16. That is an annual rate of return of 3.8%?

judging by your calculations alone this sounds like a good investment

[Mulligan]

Quote:

Originally Posted by caren22 judging by your calculations alone this sounds like a good investment

Except that it doesnt work that way and wont pay it. Accruing starts from payment date, not record or exD date.

[capjak]

Looks like some WFC/prL profit taking at beginning of year.

[pb4uski]

I'm close to being done with Fidelity. Amazingly, Vanguard allows me to buy certain tickers online that Fidelity does not. The tickers that Fidelity requires me to call in rather than order online are not exotic at all. I was working around it for a while by simply selling a ticker that Fidelity would let me buy in my Vanguard account and then buying it there and then using the proceeds to buy the ticker that fidelity prohibited me from buying in my Vanguard account... but that is a hassle so I think I'll just rollover the Fidelity tIRA to my Vanguard tIRA.

Does anyone with experience with both see any downsides to jettisoning Fidelity? I'll still have his and her HSA accounts at Fido so I'll still be able to access their website and tools.

[Sunset]

Fidelity is one brokerage I've never used... so can't help with the decision.

You can always go back in a few years if they offer you a bonus to signup