Fear creates growth opportunities in preferred stocks

[comlb]

"Seldom does an investment possess the combined virtues of manageable risk, rock-bottom prices and good prospects for growth, all with high dividend yields."

www.cnbc.com/2023/04/26/op-ed-fear-creates-growth-opportunities-in-preferred-stocks-.html

[Deleted]

From the article:

"Go pro. Investors can reduce risk by owning funds that hold less-volatile institutional preferred shares. Even some funds that are wholly institutional are accessible to individual investors. These are harder to find, but they’re around. ETF and mutual fund examples include Principal Spectrum Preferred Securities Active ETF (PREF), First Trust Preferred Securities and Income ETF (FPE
), PIMCO Preferred and Capital Securities Fund Institutional Class (PFINX) and Cohen & Steers Preferred Securities and Income Fund, Inc. Class I (CPXIX)."

The recommended active funds recent performance is no better than cheaper indexed products like PGX and PFF.

[bobfl]

Apr 26, 2023 16:58:53 GMT comlb said:

"Seldom does an investment possess the combined virtues of manageable risk, rock-bottom prices and good prospects for growth, all with high dividend yields."

www.cnbc.com/2023/04/26/op-ed-fear-creates-growth-opportunities-in-preferred-stocks-.html

Thanks.

Re: "7% to 8% from preferred shares".
Yea, junk, maybe.
The big drop was not from the bank event. That has pretty much recovered, rather from the Fed Rate hikes.
Still some good deals. Slight downward movement the last 2 days, following the DOW. Again, debt can follow stocks as the tide moves all boats. But they separate. Debt up first. Really don't want debt to follow stocks if we get into a recession, but then it will be time to buy debt bargains again, before debt moves back up again to a long term resting place, when the Fed rate stabilizes.

[bobfl]

Apr 26, 2023 18:42:39 GMT @django said:

From the article:

"Go pro. Investors can reduce risk by owning funds that hold less-volatile institutional preferred shares. Even some funds that are wholly institutional are accessible to individual investors. These are harder to find, but they’re around. ETF and mutual fund examples include Principal Spectrum Preferred Securities Active ETF (PREF), First Trust Preferred Securities and Income ETF (FPE
), PIMCO Preferred and Capital Securities Fund Institutional Class (PFINX) and Cohen & Steers Preferred Securities and Income Fund, Inc. Class I (CPXIX)."

The recommended active funds recent performance is no better than cheaper indexed products like PGX and PFF.

Puzzling. Just checked PREF. It is almost all newer, long term bonds. Pays only 4.78%. Less-volatile? No. Dividends are also volatile. Holdings are variable rates.

[anitya]

FYI only - Cohen & Steers has a bunch of preferred CEFs

Just a thought - if going for individual beaten down preferreds, sometimes it may be worth the cost to hedge by buying puts on the corresponding common stock.

P.S.: I have not done anything in this space since 2020 but starting to think about it.

[FD1000]

Observations:
Comparing SPY,PDI,PFF,PREF,PFINX and the easy index SPY beat the CEF + the other 3 preferred for YTD(short term) and for 1 and 3 years.
For 3 years with plenty of risk and volatility the SPY made so much more at 8-20 times better.
It also looks like high income and/or leveraged products have difficultly YTD with high interest rates while tech isn't. The market tells you what to do, you can't force your agenda to be better.


schrts.co/vwdUtxCh

[johnsmith]

Apr 26, 2023 18:58:10 GMT bobfl said:

Apr 26, 2023 16:58:53 GMT comlb said:

"Seldom does an investment possess the combined virtues of manageable risk, rock-bottom prices and good prospects for growth, all with high dividend yields."

www.cnbc.com/2023/04/26/op-ed-fear-creates-growth-opportunities-in-preferred-stocks-.html

Thanks.

Re: "7% to 8% from preferred shares".
Yea, junk, maybe.
The big drop was not from the bank event. That has pretty much recovered, rather from the Fed Rate hikes.
Still some good deals. Slight downward movement the last 2 days, following the DOW. Again, debt can follow stocks as the tide moves all boats. But they separate. Debt up first. Really don't want debt to follow stocks if we get into a recession, but then it will be time to buy debt bargains again, before debt moves back up again to a long term resting place, when the Fed rate stabilizes.

7 - 8% from preferred shares

I see quite a few well performing REITS that yield close to 7 or higher.

EQC-D, LXP-C, RPT-D are just three with decent balance sheets yielding close to 6-7%, during higher fear like SVB, this can jump close to 8%.
Not junk at all. cumulative.

[richardsok]

Anitya -- your post got me thinking, so ....

On a rainy Saturday afternoon, I did a manual walk-thru of preferreds listing them by the following criteria: A) must be a profitable company with a valid PE ratio, B) currently must be paying a dividend for its common stock, preferably showing enough earnings to sustain the common dividend, C) preferred yield about 6% or better, but nothing extravagant (OK, so I included NS.C and SLMBP), D) must not be very premium-priced  and E) the common must have a decent TipRanks score (5 or better)

I was suspicious of the mid-level banks and passed over several.  The list below is just a place to start poking, if anyone is interested.

DX.B           8    % preferred yield
ET.E            8
GLOP.C        8.5
GLP.B          9
GSL.B          8.5
SLMBP          11
TNP.D          9
TRTN.B        7.7
TWO.C         8.6
WFC.L         6.6
IIPR.A         8.5
MS.E           6.7
NS.C         11.6
SB.D           8
DSX.B         8.7
AGNCM       8.1
BAC.E         5.6
C.J             7
CMRE.B       8