It has been another amazing month for income investors (or flippers or dividend capture folks). We spend so much time working on this website that we can’t participate like we would like–oh well, I have fun just the same.
Preferreds and baby bonds just kind of keep creeping up–not always 25 cent jumps, but a few cents a day and then it is real money after a month.
The lousy European economy (and accompanying low interest rates) and what appears to be a softening U.S. economy have folks looking for a better yield with a decent amount of safety–partially explaining why all these new issues coming out mostly trade strongly–even though the coupons in many instances are pretty damned meager.
We had started the month of March off with 6 positions that we planned to hold only until today, but 5 of the 6 were sold prior to today and we locked down 1-2% gains on each of those issues. We don’t advocate or concentrate on ‘trading’ but the markets have brought all of us an opportunity to knock down some quick gains so why not take advantage of a situation that presents itself on a platter. It is likely that this ‘easy money’ will go away soon.
For some newer investors we want to outline-quickly and briefly, one method that we use to lock down some short term gains, while also fulfilling our ‘sock drawer’ (Gridbirds term I believe for a long term safe hold) needs.
NextEra Energy–the largest utility in the world recently sold a $25/share subordinated debenture issue with a coupon of 5.65%–maturity date in 2079 (data on the issue is here). Given that the company had other similar issues with much lower coupons (i.e. 5.25%) trading in the $25.40 area before the announced new issue the new issue seemed like a bargain. Given our best guess it seemed like the issue would have upside during the 1st month–thus we bought 200% of our normal position at $25.15. Today we sold 1/2 half the position for $25.50 and committed the balance to the ‘sock drawer’. This is how we ‘trade around’ a base position. Given the Goldilocks market we have been in this was an easy one–sometimes they don’t work so well–but this was a low risk move.
On another note over 100 issues (preferreds and baby bonds) went ex-dividend yesterday and today—maybe there is opportunity for those that have time to peruse these issues to see if some fell too much and are ‘on sale’.
Our ex-dividend calendar has been a God send in the regard–it allows some quick research on these things all in one place–we update it daily (or multiple times a day) so data is pretty fresh.
The link on the above page will open a spreadsheet which you can have right in your own google account if you desire. If one wants their own copy that is fine–but we have to manually update this data so if you take a copy you will be responsible for your own updates.