Interest Rates Totally Stable–Preferreds and Baby Bonds Follow Suit

While common stocks are off a bit, no doubt because of uncertainty in the middle east, interest rates and correspondingly preferred stocks and baby bonds are dead flat.

Income issues are so flat that for 3 days in a row (up until 11 a.m. central) today prices have moved only 1 penny from last Friday—1 penny!! I work with averages which can sometimes be a bit distorted because of ex-dividends, new issues etc., but with a large sample size the number is pretty good.

Part of the reason for no movement is that there has not been an income issue go ex-dividend since 1/2/20, but we will see 9 issues go ex on 1/9/2020.

I have added mREIT and Bank preferreds to my chart (below)–it will take a few weeks to get the data populated. I will add some other major categories soon.

16 thoughts on “Interest Rates Totally Stable–Preferreds and Baby Bonds Follow Suit”

    1. Join the club Gabriele–we could be waiting a while–but who knows for sure.

  1. Decided to sell all of my AQNB at $28.45 this afternoon that I previously purchased at $25.51. Many thanks to Tim and the commenters on this site for alerting me to this one. Holding the cash for the next opportunity.

    1. If you don’t mind sharing, what was your criteria for selling this position?

      1. I don’t mind at all Colin. I had a nice capital gain over a very short period of time and I wanted to take some money off the table given where the overall market is. Waiting in cash for the next opportunity.

        1. Funny I am pondering the same sale. I purchased at 25.46.

          The question wasn’t directed to me, but here is the way I look at this. Yes I bought this for the dividend. But I can’t help but feel that the only direction this vehicle could go is downward as it moves towards the date where the security can be called in July 2024. Since the security is already $3.46 above par, at a .39 dividend that means 9 dividends are ‘already priced in’ if I sell with no cap gain implication.

          So, if I sell today, I basically have been paid 9 dividends in advance. Now I can take those proceeds and be ultra conservative and put it into a money market at 2% or more likely, roll it not another preferred selling at a more reasonable relationship to par. The way I figure, even if I get 4.5%, it seems likely over the next 5 years, sell8ng and reinvesting somewhere else might make more sense.

          Like I said, I haven’t sold and redeployed….I am just thinking of doing so. I welcome others to poke at my thesis and by all means, educate me if I need an education. But keep in mind, I’d like to think about how I can get the best, safest return over the next 5 or so years. I kind of think Gumfighter is thinking about this in the right way. Thanks Steve

          1. I have 300 shares. I entered a sell for 200 of them today. I agree with your thinking but like to hold a core of the good ones to revisit at a lower price.

              1. SKG,

                Your response was more eloquent than mine but the thinking was very similar. I hope to find an undervalued security to replace it. I’ve got a couple more sell-limit orders, and if they hit I will share as well. Maybe others more knowledgeable than me will point out any flaws in my investing thesis.

  2. Tim – for a while now “Recent Posts” has had only one entry, and it’s the same as the featured article. Can it be changed to showing the previous article? I get behind on my reading sometimes, and I am aware of going to the Home page for all articles, but making the change requested above would be beneficial, as long as it is not a difficult re-write of the program.
    And Happy New Year to you and to all of the amazing contributors who have increased my comprehension of prefs and BBs immensly. A big “THANK YOU!” to all.

    1. MwD, clicking on top left – the light bulb logo and/or name of this website – should give you the list of posts.

      1. Thanks aarod, did not know about this (or at my age, knew it and forgot…)

        1. Thanks again aarod, it does the same thing as the “Home” link on the right, but is a little easier for me to hit (us monkeys may have opposable thumbs, but it seems thumbs are all I’ve got these days).

    2. MwD–sure–just tweaked it up to 5. I have been trying to conserve space on the right side — maybe I will have Chad try to reduced font size a bit.

      1. Thanks Tim, even three would be good as far as I’m concerned, but I can see what you mean about needing to conserve room for your veritable library of info (the price of being so knowledgeable and popular!) I’ll also try aarod’s suggestion, looks like a reasonable solution.

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