Grab 60% Over The Next 9 Years On This Preferred [View article]
First let me just clarify that this isn't a preferred, it's straight debt. It's just treated as a preferred. The best way to understand what is best for you is based on your risk appetite. The best example I can give is like this:
Let's say you own an apartment building. The bank lends you money which is senior and you have a legal obligation to pay that mortgage off with interest. The bank knows what it plans to make regardless of how the project performs. Your return will fluctuate based on rent and the market. Nobody really knows what that will be like 10 years from now. At the end of the day, you will be paying the bank off regardless of how your return looks. If your apartment project defaults, then the bank takes over. So it all comes down to how much risk you want.
I personally like this note because 10 years from now, we have no idea what PSEC will look like, I am confident it will still be around, but who knows what there earnings are like. Maybe they cut there dividend. This note will guarantee you your interest payments while protecting your principal due to a forceful maturity. Hope this helps.
Also this article isn't trying to compare PSEC common against the notes, more so it's meant to give investors the ability to purchase a note where they protect their principal, similar to a CD.
Grab 60% Over The Next 9 Years On This Preferred [View article]
Yes, but the compounding effect would be much higher than 60% on PRY as well. I didn't compound the return. You can't really compare the senior notes to the common, but I wanted to give a different perspective where individuals don't ever have to worry about their principal with this note. The $25 par is set in stone, which should help income investors sleep at night.
Grab 60% Over The Next 9 Years On This Preferred [View article]
Yup, thats a third scenario, but didn't really need to mention it since I wanted to address the worst case scenario. If it gets called anytime after the call date until maturity, the returns will be higher since the extra premium loss would be spread out over a longer period.
Grab 60% Over The Next 9 Years On This Preferred [View article]
Paul, its a matter of how much risk individuals want to take. This preferred is senior and is treated as debt, the interest paid is a legal obligation. I think a nice mix of the notes and the common would be a good option.
That one private investor really had no etiquette when talking. I agree allowing private investors is pretty cool and the CEO was nice about it. However, that one investor wasted a lot of time and didn't realize there were tons of other people on the call and he should act more professionally.
Laws Of Cap Rate Compression And Several REITs With Mispriced Risk [View article]
Nice article, Brad. When I saw OHI's yield, I knew there was more risk with it then other REITs. Sure enough, a closer looked showed some tenants I never even heard of.
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
rlp, are you referring to further capital appreciation for the preferred?
Here is my take, I don't believe that to be likely. Interest rates have bottomed and there is only one way to go. The market has no more reason to pump up GEH any more above par since the YOC would not be worth it for anyone.
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
Personally, I don't think GE-H is worth it. If we look at the common, it has a yield of 3.4%. The preferred has a yield on cost of 4.2%. So there is only a .8% difference. The difference is so small I'd rather just buy into the common and get any chance of an upside as well as future dividend increases. Just my opinion though.
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
Based on current prices, the YOC on that security is 9.5%. JCP has plenty of problems right now and given there is a strong possibility in could declare bankruptcy in a few years, I would stay away. I think JCP is one of those companies that will stay, but it will have to default and wipe out this security because its junior in the debt structure.
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
Romilar, it really depends. If it's after a call date, you want to buy below par, of course. The nice thing about this is that you limit call risk since essentially you should see an increase in price if the company calls it. However, good opportunities like this are hard to find in the current environment.
Teekay New Preferred Stock: A 7.25% Yielder Hitting The Market [View article]
Can't say why your friend said that. Although the underlying company is tied to the preferred, it is not affected by earnings unless all of a sudden Teekay was no longer able to cover it's dividend payments.
As far as a decline in earnings goes, I believe long-term fleets will always be needed. There is plenty of oil in the world and a lot of it is not easily accessible. If you end up for holding for several decades, then you would essentially get your principal back in a decade assuming you compound the dividends.
A New 8% Preferred For Those With A Moderate Risk Appetite [View article]
Grab 60% Over The Next 9 Years On This Preferred [View article]
Let's say you own an apartment building. The bank lends you money which is senior and you have a legal obligation to pay that mortgage off with interest. The bank knows what it plans to make regardless of how the project performs. Your return will fluctuate based on rent and the market. Nobody really knows what that will be like 10 years from now. At the end of the day, you will be paying the bank off regardless of how your return looks. If your apartment project defaults, then the bank takes over. So it all comes down to how much risk you want.
I personally like this note because 10 years from now, we have no idea what PSEC will look like, I am confident it will still be around, but who knows what there earnings are like. Maybe they cut there dividend. This note will guarantee you your interest payments while protecting your principal due to a forceful maturity. Hope this helps.
Also this article isn't trying to compare PSEC common against the notes, more so it's meant to give investors the ability to purchase a note where they protect their principal, similar to a CD.
Grab 60% Over The Next 9 Years On This Preferred [View article]
Grab 60% Over The Next 9 Years On This Preferred [View article]
Grab 60% Over The Next 9 Years On This Preferred [View article]
Prospect Capital's CEO Discusses F3Q 2013 Results - Earnings Call Transcript [View article]
Laws Of Cap Rate Compression And Several REITs With Mispriced Risk [View article]
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
Here is my take, I don't believe that to be likely. Interest rates have bottomed and there is only one way to go. The market has no more reason to pump up GEH any more above par since the YOC would not be worth it for anyone.
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
6.50% General Electric Preferreds - Investors Need To Be Careful [View article]
Teekay New Preferred Stock: A 7.25% Yielder Hitting The Market [View article]
As far as a decline in earnings goes, I believe long-term fleets will always be needed. There is plenty of oil in the world and a lot of it is not easily accessible. If you end up for holding for several decades, then you would essentially get your principal back in a decade assuming you compound the dividends.
New 7.50% Preferred Stock, Get In While You Can [View article]