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Post by bobfl on Apr 20, 2023 18:03:13 GMT
Please, this is for preferred investors (if any, on this forum), not for an argument about whether your investment methods are better. If you play football and I play rugby, we both should be happy.
So far this year, to track performance, I pegged this portfolio (of top bank preferreds) at "zero gain/loss" starting Jan 04 2023.
By Feb 02, up 15.11% YTD based on the feeling that the rate hikes would soon stop.
Around Fed 03 about 500,000 jobs reported which meant the hikes could continue. Start of the downward skid.
By Feb 21, it dropped all the way down to up 5.87% (from 15.11%).
March 16th, bank scare started easing at up 5.80% and started rising again.
April 13-20, waiting for the next shoe to drop, hoovering at up between 13% to 13.09%.
This is strictly the cap gains/loss. The portfolio yields 6.26% based on that Jan 04 starting point. The income is not affected by the rise or fall of the portfolio value. It includes low yielding debt from JPM, BAC, Morgan Stanley, etc.
Since I am an income investor, I don't care how the portfolio bounces around but it's interesting to watch and understand why prices bounce, especially when I need to buy more from unused dividends. This portfolio will eventually stabilize and become very boring. I will add updates as events dictate.
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Post by habsui on Apr 20, 2023 18:30:32 GMT
I started a position in PGX about one month ago (in taxable acc). It's up close to 5%.
I consider this a mid term hold (for me).
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Post by bobfl on Apr 20, 2023 19:20:49 GMT
I started a position in PGX about one month ago (in taxable acc). It's up close to 5%.
I consider this a mid term hold (for me).
Sure hope your PGX gets near that Aug 01 2022 high around when the Fed stops. Even the Jan 30 2023 high would be sweet. In the meantime, I expect fixed income to bounce around. But you should still get those nice dividends. |
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Post by anitya on Apr 20, 2023 19:55:29 GMT
Hi bobfl, How do I pull up tickers for the largest 5-6 banks' preferred on Yahoo finance? I used to invest in Flah & Crum complex but never individual issues. Thanks. |
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Post by bobfl on Apr 20, 2023 22:06:33 GMT
Hi bobfl , How do I pull up tickers for the largest 5-6 banks' preferred on Yahoo finance? I used to invest in Flah & Crum complex but never individual issues. Thanks. Hi Anitya, The easiest way to get a full list by bank (if they issue them) is to go to: www.quantumonline.com/search.cfmYou can try this without logging in. (Or you might have to register.) This site is free, but I donate when I use them a lot because it is such a great tool. At "Quick Search" at the top, type in BAC just to try it out. Then on the next page, click (in the middle of the page): Find All Related Securities for BAC
That will get all their preferred debt, even the retired debt (which is shaded). If you click any of these individual preferreds you will get a full explanation, including links to Yahoo and Matchwatch quotes. Note that preferreds are like $25 (in most cases) bonds that trade like stock and can have a tax advantage. Don't be concerned about debt written at lower rates. Even though BAC-q is written at 4.25%, the price adjusted down to match the current rate for new preferreds and Yahoo now shows a yield of 5.52%, but you can recalculate that to confirm. Try BAC -P,O,Q or S. I got those written under 5%. Because hopefully they will never be called because BAC, JPM, etc. got the money so cheap. But if they do call them, I get a big cap gain. As with bonds, if it was written at, say 4%, when a market crash happens due to rising FED rates, they can drop in price to match an expected higher interest rate. But they adjust up in price to match the dropping interest rates (as most credit does, like bonds, etc.). I got my preferreds this time when the yield for each went over 6% but prices are now up (lower yield). You still get some WFC paying over 6%; BAC, mid 5%; JPM around 5.3%. I would just give you a symbol but most brokers have their own code ending, like BACpS. Want an interesting search experience, sign up to that site (free), sign in and next to "Home" at the top, click "Income Tables", then 2nd line the "..screen form". Pick the type and sector you want. Also, check the "special lists" at the top for other dividend paying instruments. I do expect the prices to keep bouncing around until after the Fed stops, and prices should inch up if they start lowering rates and eventually stabilize if no surprises and if history repeats. They are like bonds but have a tendency to pay more. You can compare a JPM bond with the same coupon as their comparable preferred and see the difference. Plus you get the tax advantage with many preferreds. On that individual page you can see "15% Tax Rate", yes or no. Incidentally, lately I have been getting emails from BAC that they are calling (redeeming) some "Variable' rate preferreds (billion dollar amounts), since Libor went up it is costing them so much more. I got only those that were likely to never be called because companys got cheap money during the fed zero rate period. Preferreds might be called after 5 years if they can refinance them for cheaper. |
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comlb
Lieutenant
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Post by comlb on Apr 20, 2023 23:13:14 GMT
Thanks bobfl, how do you think about allocating to differrent preferred sectors like financials vs reit vs industrial and so on? With a 6% ish yield I am assuming it is a blend of different sectors. Btw, have you come across CHSCN before? Kind of an interesting oddball, ag/industrial preferrred from Minnesota that yields about 7%. It is not a public company but would be a fortune 100 if it were public, but they do issue preferred shares |
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Post by johnsmith on Apr 20, 2023 23:22:55 GMT
Thanks bobfl , how do you think about allocating to differrent preferred sectors like financials vs reit vs industrial and so on? With a 6% ish yield I am assuming it is a blend of different sectors. Btw, have you come across CHSCN before? Kind of an interesting oddball, ag/industrial preferrred from Minnesota that yields about 7%. It is not a public company but would be a fortune 100 if it were public, but they do issue preferred shares Those have been pretty safe from an income point of view.
The income had been going down, and then the Ukraine-Russia happened and fertiliser prices went up and like magic CHS was back!
You can thank USA for that.
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Post by bobfl on Apr 21, 2023 2:30:05 GMT
Thanks bobfl , ....Btw, have you come across CHSCN before? Kind of an interesting oddball, ag/industrial preferrred from Minnesota that yields about 7%. It is not a public company but would be a fortune 100 if it were public, but they do issue preferred shares Hi comlb, I owned CHS preferreds before and look them up occasionally. Last time I checked they were expensive. A while ago it was over $28.00. I try not to pay much over $25 in case they get called. But now this one is $25.17 and pays 7%. I have gone very conservative. If I was going after more yield, I might go for these again. And their financials seem good. In their prospectus, check the fact that this preferred pays a variable dividend and what that variability is based on. When I see a company paying so much for borrowing I always wondered why and wondered if this was a way to reward their co-op members, not because they have a lower credit rating. In fact, this debt is unrated. You probably read their financial report at: www.chsinc.com/Preferred prospective: www.sec.gov/Archives/edgar/data/823277/000104746914001841/a2218734z424b4.htm |
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Post by bobfl on Apr 21, 2023 3:02:39 GMT
Thanks bobfl , how do you think about allocating to different preferred sectors like financials vs reit vs industrial and so on? With a 6% ish yield I am assuming it is a blend of different sectors. My sector scope for many years was very wide. Now it is very, very limited. Low risk, household names that I can watch easily. And if I go over the rainbow bridge, my wife will not have to question what the heck I bought for us. Loaded up when all prices on these dropped to yield over 6% last year. A rare opportunity. |
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Post by johnsmith on Apr 21, 2023 11:42:36 GMT
Currently there are a bunch of safe REIT preferreds yielding over 6%
I've been purchasing small amounts of LXPpC (it's a busted convertible - where the price of LXP has to rise way high before they can convert to common so it should continue paying out for a long time. LXP also has a conservative balance sheet, industrial REIT - good sector to be in)
I also own a bit of all the three DBRG preferreds. They have been paying out for years.
I own a very small amount of CIOpA (CIO is an office REIT, low debt to equity, decent management, risky REIT sector)
I generally stick to Equity REIT preferreds. (Banks - don't trust them, not cumulative; Mortgage REITs - no knowledge of risk.)
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Post by bobfl on Apr 21, 2023 12:41:40 GMT
I owned several REIT preferreds. I don't trust any REIT preferred that private equity got as part of a buyout. :-) |
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Post by johnsmith on Apr 21, 2023 13:28:41 GMT
I owned several REIT preferreds. I don't trust any REIT preferred that private equity got as part of a buyout. :-) Yeah, There's been really bad behaviour in that area! |
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Post by bobfl on Apr 22, 2023 12:20:39 GMT
Hi Anitya, You still get some WFC paying over 6%; BAC, mid 5%; JPM around 5.3%. For some reason the avg price in my portfolio jumped up about 1% on Friday. (For new purchases, yield would be down). I saw unusually low volume for most. |
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comlb
Lieutenant
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Post by comlb on Sept 30, 2023 20:00:29 GMT
Many Preferreds seem with in shouting distance of buy zones. Beyond the usual financial fare of banks, REITs, and insurers, I like to mix in some non-financial companies like Liberty Broadband (LBRDP, it is $22.60 now and pays 7.7% unfortunately not a qualified dividend) and the CHS (midwest ag, gas stations, energy) range for example CHSCL ($25.32, 7.41%). CHS does pay as qualified dividends.
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