As we continue to work on this new website we are continually seeing charts of perpetual preferreds that show losses of $2-$3/shares since November/December. These are generally modest coupon issues – meaning that even if they are unrated they are likely decent quality.
Our mind always asks ourselves “how many years worth of dividends will it take to recoup lost capital?”.
Investors should plan for losses maybe equal to what have already occurred before 2018 is over (of course who knows for absolute certainty).
My brother, who invests in a lot of preferred stocks also, and I talked in the last year or so about how we would be more than happy with a solid 7% yield–of course now that we can get a nice 7% we don’t want it as the pain of capital losses will make it unbearable.
This is the situation investors are now in. We need to be purchasing shorter maturity issues to hold for a while, but at some point in time an investor will want to lock in the nice 7, 8 or 9%. When will that time be? No one knows but it isn’t yet, but maybe it is in 6 months or a year. All we can do is wait and see.
It is very possible the issues below will all be trading at $20-$22/share before the year is over.
Here is a sample of charts where the current yields are .4 to .6% better than they were just 3 short months ago.