As most all of you know closed end funds (CEFs) offer some of the highest quality preferred stocks available. In fact this is our favorite “shopping” place–although in their current overvalued state there are not many bargains.
The safety of these preferreds is ensured by the requirement that these CEFs have an asset coverage ratio of 200% or GREATER. For us the more the merrier.
One of our favorite issues, the Tri-Continental 5% preferred (NYSE:TY-P) which was originally issued in 1963, has a coverage ratio of 4400%.
We have updated a good share (most) of the coverage ratios for the CEF preferreds outstanding. The leverage ratios are generally published twice a year by the CEFs in their semi-annual and annual reports.
These high quality, but modest coupon issues, mostly have great safety, BUT if interest rates spiked very high the share prices would take major hits.
Disclosure – we own numerous issues on this list–multiple Gabelli Issues, the Bancroft Fund issue, the Ellsworth Fund issue, the AllianzGI issues and the Tri-Continental issue.