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

[Mulligan]

Grid, I am amazed at the NSS..why the high yield? Seems fairly safe from my research (just started it from your comment). I like the floating issues. But why has the market kept these as "stressed" yields? What am I missing? Thanks!!

Tizod, basically its a couple reasons. First NS is a perpetual leveraged outfit which keeps its credit rating where its at. But, for me with high yield, I want the “trend as your friend”, and in this sector things are going well so I have been playing here for better part of a year.
NSS will largely never creep too far above par because its past call now, so it largely has a capped ceiling. But, at near 10% and no K-1, that isnt too bad.
The sisters are K-1 and that is always a bit of an anchor. Though I have found out Turbo Tax does it just fine for me filing. Anyhow, I have been rotating out of NSS and am now roughly 50/50 splitting with Series B. Maybe catch a cap gain swing here down the road if rates keep rising. B goes exD next month, but there may be a bit of lag in yield increase since it typically is Libor from last payment date. So there is a lag effect. NSS just went exD late last month so its next Libor adjustment is up to date and larger.
But none of these issues will be called until they rid themselves of the 12% private placement which they plan to get done before next debt maturity which is several years away.

 

[Texas Proud]

I looked at I bonds and they are at 9.62%....


Seems like a good yield but wonder how long it will last...

 

[yakers]

AFAIK if the rate decreases it will be better for the bulk of my portfolio

 

[Mulligan]

I looked at I bonds and they are at 9.62%....


Seems like a good yield but wonder how long it will last...

I squeezed 40k in them, contributing 20k and gifting with GF 20k. But this will take me until Jan. 2024 to unwind. So there is some back end risk of low inflation 2023 on my part while double capturing the 7.12% and 9.6% cycles. FWIW, the following cycle is already at over 6% even if next 3 months generate 0%. So its pretty reasonable to assume likely an 8% return for next 12 months.

 

[tizod]

Does anyone follow the GEO bonds? I am torn, as the ~5% yield are still trading a bit under @like 96. So if they give $700 and 30% goes to the ~10% yield, how much will the market drop the 10%'ers? I doubt 30% drop but it could..thus making it a wash if I sell now (20% gain just selling now). Anyone have a guess as to the trading value of the 10% after this is done? My guess is ~90 or so. But maybe GEO could default easier than I am guessing.
...Seems like sell and wait and see?

 

[Freedom56]

Does anyone follow the GEO bonds? I am torn, as the ~5% yield are still trading a bit under @like 96. So if they give $700 and 30% goes to the ~10% yield, how much will the market drop the 10%'ers? I doubt 30% drop but it could..thus making it a wash if I sell now (20% gain just selling now). Anyone have a guess as to the trading value of the 10% after this is done? My guess is ~90 or so. But maybe GEO could default easier than I am guessing.
...Seems like sell and wait and see?

I don't follow the bonds per se since I don't invest in this sector. But some people asked be about investing in GEO group back in 2019 and 2020 when it was paying a big dividend It was trading in the low $20's and then around $18. My view was that GEO group and Core Civic had too much political risk going into the 2020 elections and to avoid both of them. Last year, GEO group suspended payment of dividends to pay off debt and the stock tanked. However, if you look at their balance sheet since the announcement in April 2021, their debt continued to climb. I really don't trust their financial reports. If you are sitting on a 20% gain, I would sell out an move on. There are plenty of better rated high yield investments out there today.

 

[tizod]

I have corporate action (have to call them on-they dont let me do it via website) and am trying to buy a rule144 (CBKPP) via Fidelity and they say I have to call. I cannot get anyone on the phone or chat!!! WTF! Never had this issue with TD. Had Fid IRA for years, but never needed to contact them. But many tries phone AND chat, very long holds and no replies. I had to EMAIL them to call me...and the email says wait for a response...

I am "full" at TD and need to spread to someone else...recommendations I am leaving FID after this poor customer service.

 

[tizod]

Per prior post, I'd like recommendations for a less restrictive broker -here I keep conservative but thinly traded issues (pref's, bonds, etc), so I'd like to do it mostly via website.

 

[aja8888]

I have corporate action (have to call them on-they dont let me do it via website) and am trying to buy a rule144 (CBKPP) via Fidelity and they say I have to call. I cannot get anyone on the phone or chat!!! WTF! Never had this issue with TD. Had Fid IRA for years, but never needed to contact them. But many tries phone AND chat, very long holds and no replies. I had to EMAIL them to call me...and the email says wait for a response...

I am "full" at TD and need to spread to someone else...recommendations I am leaving FID after this poor customer service.

I moved from Vanguard (IRA and brokerage accounts) to Schwab and if I call, I get a real person. Plus, no long wait times. Don't know how long this kind of service will last, though, in today's work environment.

 

[tizod]

Thanks, but Schwab and TD are "same" company and merging more going forward, and might have some overlapping risk ...so I'd like to spread to reduce risk. But good to know schwab has been good. I have loved TD - never an issue and very responsive. Opened my account (one of the first online customers) at Waterhouse in 1994 or so (can't remember, always wish I kept that file...)

 

[aja8888]

Thanks, but Schwab and TD are "same" company and merging more going forward, and might have some overlapping risk ...so I'd like to spread to reduce risk. But good to know schwab has been good. I have loved TD - never an issue and very responsive. Opened my account (one of the first online customers) at Waterhouse in 1994 or so (can't remember, always wish I kept that file...)

I forgot that Schwab and TD merged. I wonder when they will have just one website interface?

 

[Freedom56]

I have corporate action (have to call them on-they dont let me do it via website) and am trying to buy a rule144 (CBKPP) via Fidelity and they say I have to call. I cannot get anyone on the phone or chat!!! WTF! Never had this issue with TD. Had Fid IRA for years, but never needed to contact them. But many tries phone AND chat, very long holds and no replies. I had to EMAIL them to call me...and the email says wait for a response...

I am "full" at TD and need to spread to someone else...recommendations I am leaving FID after this poor customer service.

You can't buy SEC rule 144 securities unless you are are registered financial institution. It sounds silly since many secured bonds are rule 144 and offer more protection than unsecured bonds to the individual investor. But those are the rules. I have accounts at TDA and Schwab in addition to Fidelity. For new corporate issues of preferred stocks and corporate notes, Schwab and TDA are better. However when you buy on the secondary market, Fidelity is much better for online order entry. You can't place limit orders online at TDA and Schwab for corporate bonds but as you know with Fidelity, you can. As for active tenders, you need to contact a representative. I tendered my Level 3 5.375% 2025 notes at $1000 cash last week. I was told that because of the dollar amount ($200K), the tender instructions could not be completed online. They did not tell me the threshold amount. I had no issues reaching someone but you have to do it during fixed income trading hours otherwise you get a stooge who does not know anything about bonds. I bought these notes below par earlier in the year. I will receive $1000 on August 9th plus just over 5 months of interest at 5.375%. I plan to buy them back below par after the tender period expires.

I complained to Fidelity about the lack of new corporate issues and even sent them the offerings from TDA and Schwab. They did fix the issue reasonably quickly. No brokerage is perfect. Fidelity wants you to buy their funds or have their money managers manage your portfolio for a fee. The same can be said about Schwab. TDA pays next to month on cash balances whereas Fidelity cash sweep options are much better. In the end, you will find that brokers really don't want self directed investors who buy individual stocks and bonds. They would much rather deal with investors where they can extract annual fees based on the assets under management.

 

[Time2]

I've been pretty happy with some REITs that, I have bought. NLY-PF, a preferred stock I bought in 2018, it pays about 7%, the 5 year chart is pretty flat with a Covid dip.
I have had AGNCP (a preferred stock) since 3-2020, it is paying about 6.85% and a pretty flat 5 year curve, but at a bit of a low point now.
I bought RITM 7-2021 it is yielding 10.1% it took quite a Covid hit and has only recovered a bit.
Do your own due diligence .

 

[Mulligan]

I have corporate action (have to call them on-they dont let me do it via website) and am trying to buy a rule144 (CBKPP) via Fidelity and they say I have to call. I cannot get anyone on the phone or chat!!! WTF! Never had this issue with TD. Had Fid IRA for years, but never needed to contact them. But many tries phone AND chat, very long holds and no replies. I had to EMAIL them to call me...and the email says wait for a response...

I am "full" at TD and need to spread to someone else...recommendations I am leaving FID after this poor customer service.

Maybe shuffle a basic preferred from TD to Fidelity to free up cash and then buy CBKPP at TD. They sell this 144a issue, as I own it through TD. I have to shuffle all the time to another account because VG wont allow OTC trading.

 

[Mulligan]

I've been pretty happy with some REITs that, I have bought. NLY-PF, a preferred stock I bought in 2018, it pays about 7%, the 5 year chart is pretty flat with a Covid dip.
I have had AGNCP (a preferred stock) since 3-2020, it is paying about 6.85% and a pretty flat 5 year curve, but at a bit of a low point now.
I bought RITM 7-2021 it is yielding 10.1% it took quite a Covid hit and has only recovered a bit.
Do your own due diligence .

Stl Fed Bullard yapping about a 4% Fed Funds by year end. Is this bears fruit I own 4 love floaters that will kissing and flying over 10% if they dont get redeemed.

 

[Texas Proud]

I have corporate action (have to call them on-they dont let me do it via website) and am trying to buy a rule144 (CBKPP) via Fidelity and they say I have to call. I cannot get anyone on the phone or chat!!! WTF! Never had this issue with TD. Had Fid IRA for years, but never needed to contact them. But many tries phone AND chat, very long holds and no replies. I had to EMAIL them to call me...and the email says wait for a response...

I am "full" at TD and need to spread to someone else...recommendations I am leaving FID after this poor customer service.

I bought a variable interest pfd and had to call them... it is something they do that makes me not want to deal with them... I did get in touch with a phone broker right away and I did get the fee back, but this is modern times and their system should handle this ...



I have not tried Schwab but might open up an account soon to see how I feel about them...

 

[tizod]

Changing brokers

Well, I set up acct on etrade, had question of Xfer. Got into chat and they will have rep call Monday. THats what I expect, so I will 100%Xfer from FID to etrade. So I will have TD (2/3) and Etrade (1/3). I never believe all eggs should be in one basket. And I'll take Mulligans advice and move thin issues to TD and basic stuff to etrade (if etrade is a pain - but I'll test it first). I did see somewhere that etrade offers more bonds than TD but less than FID.

Thanks all.

 

[Mulligan]

Well, I set up acct on etrade, had question of Xfer. Got into chat and they will have rep call Monday. THats what I expect, so I will 100%Xfer from FID to etrade. So I will have TD (2/3) and Etrade (1/3). I never believe all eggs should be in one basket. And I'll take Mulligans advice and move thin issues to TD and basic stuff to etrade (if etrade is a pain - but I'll test it first). I did see somewhere that etrade offers more bonds than TD but less than FID.



Thanks all.

TI, How long is your lag before you can clear funds for first purchase? Funny, I dont hear much about eTrade despite all the commercials. Maybe that is a good thing that nothing is heard. Maybe few problems!

 

[tizod]

Well direct answer is -not sure. Due to corp action need to get some thing done first so overall xfer not done, but they "say" 2 days+1 after the Xfer is confirmed by FID.
But got call back by 10AM! Then I got $1000 bonus, and a rep direct number to add to the website ones.
.... and FID still wants me to call them again. The email reply I got today says they cannot call me.

 

[bobandsherry]

TI, How long is your lag before you can clear funds for first purchase? Funny, I dont hear much about eTrade despite all the commercials. Maybe that is a good thing that nothing is heard. Maybe few problems!

Hey Mulli..... I've been with E-Trade for decades now, back to when it was Brown & Co. Really no issues. I have Fidelity as well. Fido is much stricter on trades, can't trade some of the preferreds that E-Trade allowed. I like the UI of E-Trade more than Fido, especially with options trading and such, but could be just my decades with ET use. [emoji41].

 

[Montecfo]

Hey Mulli..... I've been with E-Trade for decades now, back to when it was Brown & Co. Really no issues. I have Fidelity as well. Fido is much stricter on trades, can't trade some of the preferreds that E-Trade allowed. I like the UI of E-Trade more than Fido, especially with options trading and such, but could be just my decades with ET use. [emoji41].

Ditto all counts. Brown & Co was the best.

Sent from my Pixel 3a using Early Retirement Forum mobile app

 

[Mulligan]

Maybe shuffle a basic preferred from TD to Fidelity to free up cash and then buy CBKPP at TD. They sell this 144a issue, as I own it through TD. I have to shuffle all the time to another account because VG wont allow OTC trading.

AGRIP has been taken off experts market recently and is tradeable OTC now. Its a 144a fixed to float 6.875% Baa1 preferred that floats to Libor plus 4.225% in 2025. Around $103, if it ever drops I will look there. Agribank is
one of only 4 US Banks in the top 50 safest banks in the world. All 4 US banks are sisters in the farm credit system including CoBank. I have a lot of CBKPP and am hoping it survives call notice and starts floating following divi.

 

[youbet]

I'm confused (again). Can anyone help me understand the following scenario?

CHSCP is an 8% perpetual preferred of CHS. It closed at $30.20 yesterday. It's next call date is 28 July 2023 at $25. That looks like a negative YTC to me. Why would it be selling at a price that results in a negative YTC?

I called CHS investor relations and they said they had no information that the call date was being extended (as happened in 2013).

What am I missing?

 

[youbet]

AGRIP has been taken off experts market recently and is tradeable OTC now. Its a 144a fixed to float 6.875% Baa1 preferred that floats to Libor plus 4.225% in 2025. Around $103, if it ever drops I will look there.

Have you looked at CHSCM? Will float at 4.144 + 3 mo Libor beginning 30 Sept 2024.

I have a lot of CBKPP and am hoping it survives call notice and starts floating following divi.

Just noticed it's been called for 1 Oct 2022.

 

[Mulligan]

Have you looked at CHSCM? Will float at 4.144 + 3 mo Libor beginning 30 Sept 2024.
Just noticed it's been called for 1 Oct 2022.

Yes, I know about CHSCM. Now this is only my take so there is no science behind it. But its floating date is too far out for me to look at, especially being above par. In 2 years it (or SOFR its replacement) could be significantly lower than today. My personal inclination is owning the “live floaters” such as NSS, NS-B, RZA, CUBI-E and F, and SLMBP. A few could get redeemed like CBKPP, but if they do, there is no money lost in a call. CUBI’s for example are locked in for another payment minimum after this one because they can only redeem on payment date.