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Nothing Wrong With a Small Allocation to Fixed to Floating Preferreds

I have a couple mREIT fixed to floating rate preferreds in the portfolio–in limited quantity that have performed very well in the current environment.

Looking at the reduced potential for interest rate cuts from the FOMC this year these issues have good potential (at least relative to fixed rate preferreds). Markets are likely to be ‘dicey’ all year long so one just as well be paid for their invested dollars at the maximum available rate.

As a pretty conservative investor I don’t buy mREIT common shares—EVER, but the fixed to floating preferreds have the right risk/reward for me. I never go ‘all in’ to anything, but a modest allocation is quite comfortable.

I have a fixed to floating list with potential coupons on it which can be found here. Of course one never knows the exact coupon until the dividend determination date (the date that SOFR is observed for the coupon).

6 thoughts on “Nothing Wrong With a Small Allocation to Fixed to Floating Preferreds”

  1. I was going to add to NLY G today. ….pause…..Maybe I should go back in and re evaluate from largest down.

  2. Brighthouse financial exploring selling itself. Why are their preferred dropping while their common stock goes up almost 10% ? Wouldn’t the buyer have to either continue paying the dividend or redeem it?

    1. aj–selling the company brings uncertainty. The buyer could delist the preferred shares and while they would continue paying investors would sell off the shares. They would only have to redeem the shares if the prospectus indicated this was the case and I haven’t looked.

      1. Tim can the coupons be automatically updated on the dividend determination date? This would provide the current coupon of each entry in the list.

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