Understanding preferreds may be simple, but it can get much more complex when trying to analyze the underlying company's ability to pay the dividends.

Tsakos Energy (TNP) released a new preferred offering at the beginning of May. The preferred has a yield of 8%. This is a fairly decent yield, but how has the entire company fared lately.

The total offering amount is $50 million. So an 8% yield means the company will have to pay around $4 million in distributions yearly. Doesn't seem so bad for a company that made $60 million from operations in 2012, right?

TNP is unique because while it does produce a decent amount of cash flow, the cost of capital expenditures have caused it to report negative free cash flow. However, there may be a bright side to this. The negative free cash flow has fallen over the past three years from losing nearly

I had an interesting argument with a colleague of mine. He kept saying dividends are boring and that by investing in preferreds, you miss out on 20%+ gains on growth companies. I wished him the best of luck and told him to continue with his tech stocks and I will continue with my dividend stocks. I don't pretend to understand the market since there is just so many pieces involved. I use my best judgment to help grow my portfolio at a nice pace without having to monitor it every two hours.

That's why I always like dividends. It's something I understand and at the end of the day(or year) you know your portfolio will continue to receive cash. One of the opportunities I recently found has been really intriguing. It can give income investors the chance to get more than 60% in dividends by 2022. This might be a

Whenever I see stocks significantly above par value, I cringe. More often than not, it's due to income investors trying to grab yield in such a low rate environment. I can't blame these investors; many of them are retirees or soon-to-be retirees that are trying to live off the yield. It's not that bad when the preferreds still have far out call dates, but when the dates are around the corner, it could result in a mess.

General Electric (GE) is one of the largest companies in the world. Its diversification and net profit leave little room for concern. That's why GE's series A preferred is a guaranteed safety net with a strong yield of 6.5%. Well it's actually more like 6.25% if you buy today. Still a great yield on one of the top companies in the world.

Before investors start jumping in, I am sorry to be a

CYS Investments (CYS) recently announced the offering of its new series B preferred. The company issued 8 million shares with a coupon of $200 million. CYS is a mREIT primarily focused around residential mortgage securities. It mainly intends to use the proceeds to purchase more securities.

CYS is trading over the counter and is currently under the par value of $25. It's likely that the shares will appreciate above par once they begin trading on the NYSE as CYS-B. This is an opportunity for income investors to grab a 7.5% yield without having to pay above par, which is something that's not too common.

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With the recent Bernanke hearing, nobody knows when interest rates are going to rise. Most likely it's possible they could see slight bumps in 2014, but nothing significant enough to hurt principal for preferred holders. The time spent waiting for rates to

Earlier this month, Goodrich Petroleum (GDP) issued a $100 million worth of perpetual preferred stock. The preferreds carry a 10% yield. A nice yield that many income investors would salivate at. However, I believe this is something that you need to stay away from, no matter how nice the dividend stream is.

To understand why this is a very poor investment choice for income investors, we need to examine the company's ability to pay the preferred. Since it's 10% at a $100 million offering, the yearly distributions will be $10 million. Can the company afford this?

Well let's take a look at Goodrich's cash flow over the past three years. In 2010, the company had negative FCF of nearly $164 million. In 2011, it was nearly negative $200 million. In 2012, it was negative $80 million. This is simply the cash flow related to operations. The company has also

Teekay Offshore Partners (TOO) has announced a public offering of its series A preferred. The preferred will have a coupon of 7.25% and seems like a great opportunity for income investors to grab when shares are made available to the public.

Teekay Offshore owns more than 37 tankers and several oil tankers. It primarily provides services to oil service companies. This is a different preferred from what we typically see. Usually financial institutions and mREITs are big in this space. It's nice to see a change of scenery.

Many preferred investors have limited choices in terms of diversification for preferreds. While preferred yields are nice, we don't want all our eggs in the financial and mREIT industry. That could be a bad scenario for your portfolio if certain macro events were to happen.

Whenever investors are looking at preferreds, it's best to look at the underlying company to see

Grabbing yield in this market can be difficult, especially for those that are in need of dividends for their retirement portfolios. A new preferred stock began trading and I believe it provides a compelling opportunity, which many income investors should jump on.

NorthStar Realty Finance (NRF) has issued its series D cumulative preferred stock. The shares were issued this month and are not callable until April 2018. The yield on this a nice 8.5%. Normally, when companies issue preferreds with nice coupons, investors jump in and the price shoots up well above par. As of 4/19, the share price was $25.02, which is only a 2 cent premium.

This premium is nothing and investors will make it up when they receive the quarterly dividend payment next month. NRF will have an easy time maintaining these dividend payments as the underlying company is fairly profitable. Keep in mind that preferreds are

The S&P Dividend ETF (SDY) is trading at an all-time high. The ETF holds stock of 90 large dividend-paying companies.

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Income investors such as myself take pride in the fact that our investments have seen significant price appreciation. Although I probably won't plan on selling, the real issue is what do I do with all that dry powder I have?

Many investors are in the same position. They have investments returning significant dividends each quarter and the cash is piling up. For those who have DRIPs set up, you could continue to maintain the plan, but keep in mind, you will be reinvesting at a relatively higher price. If you are comfortable with this, then you should continue with it, but be warned that equity prices could fall from their current level.

The other option is to hope for a market pullback, but there are problems with

Many income investors are always searching to find a decent yield in a low rate environment such as this. MLPs are great way to receive tax-free income, but their complex tax structure can turn investors away.

It's important to note that many distributions normally consist of return of capital. They do this to provide a tax shield for unitholders. However, there is much more to the story, and investors should understand if they are comfortable with this sort of investing.

MLPs are typically great investments for a number of reasons. They provide a nice stream of income to unitholders. However, the tax complications arise when typically selling your units. If an MLP is distributing mainly a return of capital, then your cost basis will decrease to reflect that amount.

Here is an example:

In 2012, Kinder Morgan Energy Partners (KMP) paid $4.85 in distributions to unitholders. To make our example

Gold has not been able to enjoy a rally that equity markets have saw. Year to date, gold is down 4.5%, while the S&P is up 10%.

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The reason why gold is down may speak for itself. It's often believed that a strong equity market will translate to a lack of demand for gold. Gold is a hedge when the market is falling, so it's pretty clear investors have little reason to invest in gold when equity prices are rallying.

Scotiabank believes that gold prices will remain flat or decline due to lack of risk aversion. I agree with Scotiabank's thesis here. If we look at the flow of funds, we can see institutions are rotating out of defensive assets such as gold. In February, ETFs sold a 106 tons of bullion. Investors are choosing to be more aggressive as strong GDP numbers show

With sequestration having been passed, investors may be concerned about companies with heavy exposure to areas such as the Department of Defense. It's logical to believe that defense cuts will materially impact contractors. However, there is one company that believes that the sequestration will have an immaterial impact. It is also putting money where its mouth is by distributing more capital to shareholders.

SAIC (SAI), which provides IT and engineering services to the DoD and other federal agencies, has announced a $1 special dividend to be distributed in June to all common shareholders. The special dividend has a yield of 7.5% at current market prices. This is a nice distribution for shareholders, and should ease concerns about sequestration. Management is signaling that even with budget cuts, the company will be fine.

Even sequestration, management has mentioned that backlog has not changed at all. The company ended the quarter with

Facebook (FB) is still trading at a steep discount. The sad part is that many shareholders seem to know that the stock is trading at a high valuation. However, they seem to justify the current valuation by believing that Facebook could become the next Google (GOOG).

While Facebook has a user base over a billion, they just haven't been able to monetize it. Companies like Facebook have to give away services to attract users and instead use advertising to make money. It's much easier to build a strong user base through free services.

I believe the company is overvalued and have completed a DCF. The following model shows that even under the most optimistic conditions, Facebook is trading at an expensive valuation.

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I have used the following assumptions when performing the model:

• A 45% annual EBIT growth for the next five years
• Constant depreciation of $700M.
• Constant

There have been clear signs of a turnaround in the housing market. Prices all over the country are beginning to rise. Add this in with a stellar jobs report and a strong recovery is taking shape. With housing demand rising, investors are choosing to focus on builders such as Toll Brothers (TOL) and DR Horton (DHI). However, there is an area that will benefit well from an increase in home buyers.

Home furnishing retailers will see revenue growth rise well. There are two companies, which I believe will benefit strongly from this. The following home furnishers will appreciate in value due to a stronger housing market.

Bed Bath & Beyond (BBBY) is the largest one in the group, with a market cap over $13.5 billion. The company has grown revenue by 23% over the last three years. This revenue growth comes at a time when retailers have suffered due to

A popular SA author posted an article about Bank of America (BAC) failing shareholders. The author makes some good points especially regarding BofA's massive balance sheet and the need for a dividend increase. I have been holding BofA since I bought in $5 range and I would love to see a dividend increase, but I am fairly content with BofA's new capital plan.

Bank of America will purchase $5 billion in common stock and redeem $5.5 billion in preferreds. BofA is redeeming BAC series H and series 8 preferreds. The weighted average cost of the preferreds is around 8.4%.

So by redeeming the $5.5 billion worth of preferreds, the company will stand to save $460 million a year in dividends. The cost of capital for preferreds is higher and makes plenty of sense why the redemption needs to happen.

Buybacks usually concern shareholders since its difficult to determine

Apollo Commercial Real Estate Finance (ARI) is a company that assists in originating, investing, managing, and acquiring CRE loans.

Apollo is a well managed financing company that has focused primarily on the CMBS market, but provides mezz financing as well. The company currently has a yield of 9.3%, which might scare investors into thinking there is significant risk here. However, this is simply not the case.

In 2012, Apollo completed $264 million in new transactions. The new transactions had a weighted average IRR of 13%. The total portfolio stood around $669 million with an averaged weighted IRR of 14%. So its pretty clear that the company is generating a more than sufficient enough return to pay the current dividend, while retaining additional capital on the balance sheet.

Investors may be concerned over the capital raises the company has done, but should understand that it's a REIT. REIT's typically raise capital

We all know that Apple's (AAPL) $137 billion cash hoard is upsetting investors. Tim Cook has not said anything that would appease investors. While Apple continues to sit on cash, Samsung (SSNLF.PK) is eating their lunch.

The smartphone industry is a tough business. Its a business where a major player could fall off the grid by making one mistake (see: Palm). Apple is still a huge player, but its clear Samsung phones are simply superior in a lot of aspects.

The Galaxy S3 just beat the iPhone 5 on CNET's device rankings. CNET mentions that the S3 has better display, camera, and price point. Battery life is common concern shared amongst smartphone users. What's the point of having a smartphone if it constantly dies all the time?

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Its becoming clear that Apple just does not seem to be innovating as fast as Samsung.

If you bought into MGIC Investment Corporation's (MTG) stock in the last 6 months, then you have made quite a pretty penny. In the last month alone, the stock has risen nearly 80%. After a run like this, people should be running to take profits, but optimism is still high for the company.

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MGIC is up because the company has announced a capital raise that would allow it to get its risk-to-capital ratio to what regulators typically require. As of December 31st, MGIC had a risk-to-capital ratio of 47.8 to 1. Regulators typically require 25 to 1. Radian Group (RDN), has a ratio closer to 20. So its pretty clear that MGIC was in need of capital to help lower their leverage.

The company has raised more than $1.1 billion. This helps a lot considering the company needed a minimum policyholder position of $1.2 billion.

Mark Gomes, a SA contributor, posted an article about Himax Technologies (HIMX). The article talked about Google (GOOG) Glass and the likelihood that Himax could be a major supplier. The stock shot up more than 30% and it seems it was mainly due to the article. Gomes quoted Karl Guttag, a highly regarded expert in the field of integrated circuits. Gomes mentions that Karl's blog may have been referring to Himax. However, Karl responded to the article by saying it was unlikely that Google is using a Himax LCOS panel. Karl mentioned that there are other players in the space that are more likely to be the supplier for Google Glass.

Regardless of the blog posting, Mark Gomes makes a very strong case for Himax. Gomes also has an exceptional track record with picking small-cap stocks that essentially generate significant returns. I personally follow him and I encourage

American Realty Capital's (ARCP) acquisition has officially closed and shareholders are set to reap the benefits. While I do believe the stock is a buy, I want to first address the decline in the share price recently.

It's reasonable to believe that the decline might simply be shareholders of ACRT III selling their shares at a premium. When ARCP acquired ACRT III, it gave shareholders of ACRT two options. They could either receive .95 of ARCP common stock or $12 in cash.

Given that ARCP's stock was trading above $14, it would be irrational not to take the common stock offer. Only 16.5% of shares were converted to cash. So the remaining 83.5% were converted to ACRP shares. The recent selloff is clearly the new shareholders that were simply looking to exit at a higher price.

I believe this decline presents a great buying opportunity. The merger will provide

Barron's has posted an article about concerns over rising inventory for the BlackBerry (BBRY) Z10. James Faucette of Pacific Crest mentioned that UK retailer's such as Carphone Warehouse and Phones 4U are discounting their prices.

Carphone Warehouse has dropped the price by £6 a month. So this is a £160 less over the two-year contract term. Vodafone (VOD) also lowered its price over the contract term as well.

Our checks indicate that as sell-through run-rates for the Z10 have declined meaningfully in the weeks following launch, we believe carriers and third-party retailers in the U.K. are already well above typically targeted inventory levels. Canadian carrier stores and retailers also appear to be rapidly approaching targeted levels, in our view.

- James Faucette, Pacific Crest Securities

It's very likely that Faucette could be right about inventory. These retailers are not known to apply discounts unless their is a buildup