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

[Mulligan]

Shows callable at $25 plus accrued and unpaid dividend. That additional 34 cents pumps your YTC to 7.3% (XIRR of 7.7%).

I used proceeds from ALLY-A and jumped in at $25.82 for 7.6% return (XIRR of 8.0%). And it's QDI which makes this significantly richer than the return I was getting with ALLY-A.

I havent done the math but I think that is a bit rich as you have to allow for the loss of principal at call. At 25.58 when I bought I jad it at about 7% YTC annualized.

 

[bobandsherry]

I havent done the math but I think that is a bit rich as you have to allow for the loss of principal at call. At 25.58 when I bought I jad it at about 7% YTC annualized.

Yep, calculated the loss of principal at call. 3 div's @ .6094 plus tail end to call @ .3339 cent. Total div paid of $2.16, less 82 cents (purchase price to par) for $1.34 net. That's 5.2%, but wait, it's only 251 days holding which juices it to 7.6%. Using Excel for XIRR:

XIRR	8.0%
4/24/2018	-25.82
4/30/2018	0.6094
7/31/2018	0.6094
10/31/2018	0.6094
12/20/2018	0.3339
12/31/2018	25.00

 

[Mulligan]

Looks good Bob... These are the types of trades are the “safer” trades in this yield scare environment despite what might be perceived as a “riskier” company to invest in. Unfortunately, I cant get back in as I am out of investing cash. Care to spot me a loan?

 

[bobandsherry]

Looks good Bob... These are the types of trades are the “safer” trades in this yield scare environment despite what might be perceived as a “riskier” company to invest in. Unfortunately, I cant get back in as I am out of investing cash. Care to spot me a loan?

Heh - you don't need more investing cash, you don't spend any of what you already have

Perhaps RLGT is riskier, but their payment history on the preferred has been solid so I don't figure they'll dump on the last couple of div's, but if they do there's 2% kicker.... I don't see them setting the world on fire, not usually the type of company I'd look at, but looks to be pretty stable based on review of BS and IS.

 

[Mulligan]

Heh - you don't need more investing cash, you don't spend any of what you already have



Perhaps RLGT is riskier, but their payment history on the preferred has been solid so I don't figure they'll dump on the last couple of div's, but if they do there's 2% kicker.... I don't see them setting the world on fire, not usually the type of company I'd look at, but looks to be pretty stable based on review of BS and IS.

I agree, at this point, I think the risk is very small. I owned it and would have no problem owning it again.

 

[Mulligan]

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

Thanks for sharing....

I take a similar approach, but usually target 300 shares but have dipped in for 1,000 on a couple that seemed really good.

I'm sitting on AILLL, ALLY-A (lowered pressure in tires recently), BGCA, FTRPR (got in after drop as a play), GNL-A, NSS, RILYZ

RLGT-A has recently caught my eye and doing some due diligence as a guilty pleasure holding (9.75 coupon / 9.45% CY that goes ExD on 4/26). Callable on 12/20 so may be short term play.

I bought 500 shares this morning of DM at 15.00. If the MLP tax problem becomes a problem after 2020, I bet Dominion rolls this back up and maybe a little cap gain. But until then the yield almost 9% and they just jacked it up again for next month with more promised. I havent mentioned mine FWIW, but here is what I have now in no particular order.
AILLL, FIISO, CTWSP, CTWSO, MSEXP, BGCA, NSS, RILYL, WFC-J, PFX, PCG-A, CNIGO and MTB-C

Percentages all over the map...Considerably more weighted in AILLL, FIISO, BGCA, WFC-J, RILYL, and NSS than the others.

 

[bobandsherry]

I bought 500 shares this morning of DM at 15.00. If the MLP tax problem becomes a problem after 2020, I bet Dominion rolls this back up and maybe a little cap gain. But until then the yield almost 9% and they just jacked it up again for next month with more promised.

Hey.... Barron's had a write-up on MLP's and there was also discussion on Fast Money.

If you are trolling a lure sometime for another high yield flyer that's not a preferred keep an eye on ARCC. I've held this high yield flyer for several years, up a tad over 1% on price in that time but has paid a healthy dividend, currently yielding 9.53% currently. They also have a preferred AFC which is Ba1 rated and has 6.73% yield.

 

[Mulligan]

Bob, my problem is I refuse to mess with K-1s. So I only dabble in my Roth to stay under $1000 UTBI. Some non K-1 funds I could look at but never really got focused enough to study them yet. Maybe I should.

 

[bobandsherry]

Bob, my problem is I refuse to mess with K-1s. So I only dabble in my Roth to stay under $1000 UTBI. Some non K-1 funds I could look at but never really got focused enough to study them yet. Maybe I should.

ARCC is 1099-DIV, link for reference to 2017 distributions as reference.

 

[Texas Proud]

Yep, calculated the loss of principal at call. 3 div's @ .6094 plus tail end to call @ .3339 cent. Total div paid of $2.16, less 82 cents (purchase price to par) for $1.34 net. That's 5.2%, but wait, it's only 251 days holding which juices it to 7.6%. Using Excel for XIRR:

XIRR 8.0%

4/24/2018 -25.82

4/30/2018 0.6094

7/31/2018 0.6094

10/31/2018 0.6094

12/20/2018 0.3339

12/31/2018 25.00

Well, I decided to jump on this train

Got in at 25.82.... but if the shares do not go down by the divi I might be flipping... take half a divi and run.... it has been working for me for awhile...

 

[bobandsherry]

Well, I decided to jump on this train

Got in at 25.82.... but if the shares do not go down by the divi I might be flipping... take half a divi and run.... it has been working for me for awhile...

Hopefully it isn't a case of misery loves company

 

[Texas Proud]

Well, I decided to jump on this train

Got in at 25.82.... but if the shares do not go down by the divi I might be flipping... take half a divi and run.... it has been working for me for awhile...

Well, I could not resist .... sold my stake at 25.55 for a 34 cent gain after divi holding for 1 day.... this is one of my highest yield flips I have done...

Now to find the next one....

 

[aja8888]

Well, I could not resist .... sold my stake at 25.55 for a 34 cent gain after divi holding for 1 day.... this is one of my highest yield flips I have done...

Now to find the next one....

This is Day Trading at its finest!

 

[brokrken]

Well, I could not resist .... sold my stake at 25.55 for a 34 cent gain after divi holding for 1 day.... this is one of my highest yield flips I have done...

Now to find the next one....

That's one hell of an annualized return. You should have done that with your whole net worth.

 

[Texas Proud]

That's one hell of an annualized return. You should have done that with your whole net worth.

Just doing it with $10 to $20K....

But I am surprised how good it can be... my last year net income is over $4,300 representing a 33% annualized gain....


In a little over 1 1/2 year I have done 26 flips with a 19.5% gain... a total of 3 losing trades (2 early which is why my total is lower than my past year)...

I am a bit surprised that last year over a 6 month period I actually sold out prior to divi.... I bought the shares earlier than normal and the price went up more than I had anticipated keeping after divi.... so I sold...

I have been thinking about doubling the amount of money I flip with, but some of these are low volume and I could be stuck with them for awhile... I usually try and keep a week or two, but have been stuck with one for 99 days before selling at a loss....

I think I am getting a better feel of how to do this...

 

[Mulligan]

Just doing it with $10 to $20K....

But I am surprised how good it can be... my last year net income is over $4,300 representing a 33% annualized gain....


In a little over 1 1/2 year I have done 26 flips with a 19.5% gain... a total of 3 losing trades (2 early which is why my total is lower than my past year)...

I am a bit surprised that last year over a 6 month period I actually sold out prior to divi.... I bought the shares earlier than normal and the price went up more than I had anticipated keeping after divi.... so I sold...

I have been thinking about doubling the amount of money I flip with, but some of these are low volume and I could be stuck with them for awhile... I usually try and keep a week or two, but have been stuck with one for 99 days before selling at a loss....

I think I am getting a better feel of how to do this...

Congrats Texas! I suspect you know, but the benefit of this issue is two fold. The high yield and the approaching call. These issues can provide you some cash like what you did...I bought 400 more of NSS to hold...So I am out of cash....Sitting tight...But you may consider looking at CPE-A as another trade like you just had...Approaching call real soon, a small bit of meat on bone and a 10% par to backstop you....All with oil on the upswing. No call announcement yet...Do the math to be sure and appropriate price point if interested.

 

[bobandsherry]

Just doing it with $10 to $20K....

But I am surprised how good it can be... my last year net income is over $4,300 representing a 33% annualized gain....

Nice - That will buy a couple steak dinners with good bottle of wine!

 

[Mulligan]

Nice - That will buy a couple steak dinners with good bottle of wine!

Lol, where I live, that would buy me a once a week steak dinner for two and wine for almost an entire year.

 

[Texas Proud]

Now I am getting mad....

Have a bid in on some shares... at 25.65..... so, look at the trades that have happened today and what do I see Shares traded at 25.6501!!!

You know that normal folks cannot get that kind of price...

So the sale was 2 cents more than what I had offered....

And it would have been half of my order...

 

[brokrken]

Now I am getting mad....

Have a bid in on some shares... at 25.65..... so, look at the trades that have happened today and what do I see Shares traded at 25.6501!!!

You know that normal folks cannot get that kind of price...

So the sale was 2 cents more than what I had offered....

And it would have been half of my order...

That's my kind of luck. On what issue?

 

[Texas Proud]

That's my kind of luck. On what issue?

BCGA.... the shares are selling for more than that, close to 25.81.... mine was the current buy bid... I think someone put in a market sell and some broker saw the spread and decided to buy them and hope to flip them... using computers to do it, not a person...

 

[Winemaker]

Lol, where I live, that would buy me a once a week steak dinner for two and wine for almost an entire year.

Mully, you need to start buying a little better wine! Blow that dough!

 

[Mulligan]

Mully, you need to start buying a little better wine! Blow that dough!

Well, its a double problem, Winemaker...Buying off the low end of the wine list, and my favorite steak by far is the lowly sirloin.

 

[Mulligan]

BCGA.... the shares are selling for more than that, close to 25.81.... mine was the current buy bid... I think someone put in a market sell and some broker saw the spread and decided to buy them and hope to flip them... using computers to do it, not a person...

Texas that happened to me on my first higher purchase as shares were not moving much. But the one day for about 30 min you could pick the bottom which I did at 25.41 and snagged them all easily. I think you are correct, its market maker I bet.
I bought 200 shares of CPE-A today at 50.78. Gonna see how this plays out for a while as it approaches call date.

 

[bobandsherry]

Texas that happened to me on my first higher purchase as shares were not moving much. But the one day for about 30 min you could pick the bottom which I did at 25.41 and snagged them all easily. I think you are correct, its market maker I bet.
I bought 200 shares of CPE-A today at 50.78. Gonna see how this plays out for a while as it approaches call date.

I've got to ride your order coattails when you buy, seems you always manage to get at the low for the day