Purchased Some South Jersey Industries Baby Bonds

Yesterday I made a purchase of a 1/2 position in the South Jersey Industries 5.625% Junior Subordinated notes (SJIJ).

While the issue is a notch under investment grade it appears that the risk/reward was about right for the price I paid–$24.80–a current yield of around 5.70%. These shares had traded solidly in the $26.50 area prior to the pandemic.

As I have mentioned I am pretty loaded up with utility issues–mainly electric utility baby bonds and with closed end funds (CEF) preferreds–most bought at bargain prices last month so have been mostly lying in the weeds in the last couple of weeks around 70% and watching for reasonable buys.

I am quite convinced we will see lower prices in many preferreds and baby bonds–but when? In the meantime I really want to get back on the dividend train so will get some decent quality issues here and there to get the dividends and interest rolling.

South Jersey Industries is the natural gas supplier for a portion of New Jersey and recently reported solid earnings for Q1 ending 3/31/2020. More importantly they affirmed their forecast for the balance of the year–very solid numbers (of course who can totally forecast in this environment).

The shares go ex dividend on 5/29/2020.

16 thoughts on “Purchased Some South Jersey Industries Baby Bonds”

  1. I’m attempting to place an order on Schwab but I need the cusip #. Anyone have it? Thanks.

    1. Randy, are you referring to SJIJ and they cant transact by ticker like any normal brokerage? Give them this and see if it helps and then tell the numbnuts to get their act together it doesnt trade on the bond market!
      CUSIP: 838518207

  2. Roger Conrad who publishes Conrad’s Utility Investor highlighted South Jersey in this month’s letter. He rates it an A.

    1. JB
      Have you found conrad’s publication of use? Interested in the sector and looking for more information. tia sc

      1. Yes, I have used it for over 8 years. You can follow his conservative or his aggressive portfolios. He gives you buy under pricing, profit taking, opinions on dividend cuts, monthly analysis on over 100 essential service stocks, along with his featured articles. I think the entire cost is like $99 a year. I think once a quarter he has a podcast and will answer any question you have. He will stay to the last question, which sometimes is 6 hours.
        Good, experienced hard working guy, unlike the ones on SA.

        1. JB
          Thanks the inputs. I did check his website and the annual charge is about 500 not 99 unless he offers two publications. Better check. If you figure out the source of the 99 dollar deal perhaps you could let me know. tia sc

            1. JB
              not a problem. These things happen. I normally do my own DD or rely on industry friends but this is a sector which I don’t know that well. best sc

  3. I was able to add to my position @ 23.50 Thursday, added just enough to get my average cost down to $24.74

    1. I got 5 shares at that price getting greedy and had to chase back to 24 to get my allotment. That was a good quick strike as it was being dumped that day.

    1. SJIU is interesting, I would buy it around 40 (I guess it will get to 40 if the SJI price drops a bit). but I will wait for some mispricing

  4. These are not ordinary times, so I’d be careful with any note where the company reserves the right to defer interest payments without default.

    1. Its in front of common and they have 68 years of consectutive years paying common. And they get rate relief from deadbeat payers. Nothing is guaranteed though. Plus high profit gas season is over for gas utes.

    2. Citadel–probably 1/2 the ute issues I have are able to do this—I think if any of them defer we, as a nation, are in very deep shxx–even deeper than we all know we are.

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