This is the 2nd of 3 little articles which name preferred stock or baby bonds which I believe have the potential to reach a share price which will result in a 7% current yield. This is the target current yield. My preference is that they are mid quality or better (and every one has there own definition of mid quality).
As most of you know I have owned term preferreds and short dated baby bonds for the last few years–in quantity. I am adjusting what I buy a bit by adding more perpetual issues with tasty yields while maintaining substantial short dated maturity issues. Today 7% or better is my target, but that can adjust as time goes by. I have sustained some capital loss by owning some perpetuals, but it is only about 2% and I can live with that for now.
At this moment I own bunches of ‘term preferreds’–virtually all of them except I own only a couple of the Priority Income Fund term preferreds. All the term preferreds and baby bonds with short dated maturities can be found here. It is a fair assumption that I am watching all of them, but I don’t expect they will attain a price which gives me a 7% current yield–if they fall that far in price I will be a likely buyer (adding to positions).
I like Pebblebrook Hotels (PEB)–one of the most financially strong Lodging REITs. Obviously with Covid they have taken a spanking, like all lodging companies. The company has a 6.375% perpetual (PEB-E) which is trading at $23.50 for a current yield of 6.78%. They also have a 6.50% issue (PEB-F) priced at $23.57 for a current yield of 6.68%. Both issues are currently callable.
For years I have liked monthly payers and Armour Residential Mortgage (ARR) has had a 7% monthly payer outstanding for a number of years (ARR-C). The issue is now trading at $24.45 for a current yield of 7.15%. I own this issue.
There are 2 perpetual preferreds outstanding from UMH Properties that may be attractive. The UMH-C 6,75% issue which has an early redemption date starting in July, 2022 is now trading at $25.09 for a current yield of 6.73%. The UMH-D 6.375% issue is trading at $25.38 for a current yield of 6.28%–the early redemption date doesn’t start until 1/2023.
Qwest Corp has 2 baby bonds outstanding–CTBB has a 6.50% coupon and a current yield of 6.53%–trading at $24.86 and is currently callable. CTDD has a 6.75% coupon and currently is priced at $24.99 for a current yield of 6.75%–it becomes redeemable 6/15/2022. I don’t own these but may own some very soon–these are split investment grade. One or both of these could be called soon–but at these share prices no financial harm would be done.
That’s it for now.