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  • Don't Buy Preferred ETFs, Build Your Own [View article]
    So normally to get the 15% taxable distribution the underlying company cannot be a REIT or a company where the shareholders are considered unitholders such as a MLP. REIT preferreds are subject to OI taxes. Even though preferreds are on the lower food chain, the likelihood of a default is low assuming the underlying company is strong. It's important to look at cash flows and observe coverage of not just the preferred payments, but the common as well. Preferreds being called is only an issue if you bought above par. This is why I recommend readers to never do that. The recent increase in interest rates has pushed the preferred market back into reality. So you are less likely to see them trading above par now, which is nice.
    Sep 16 04:30 PM | 2 Likes Like |Link to Comment
  • Don't Buy Preferred ETFs, Build Your Own [View article]
    Yes I was going to do that. However, I am in the middle of working on a few new articles. If you need any suggestions, you can look at my previous articles to help you get started. Thanks for reading. Stay tuned.
    Sep 16 10:08 AM | 1 Like Like |Link to Comment
  • Alcoa, BofA, and H-P dropped from DJIA [View news story]
    I can understand Alcoa and HP being removed. I just don't understand how Goldman Sachs is a good component, it makes no sense. These guys make money in good and bad times. The DJIA is suppose to be an indicator for the economy. GS doesn't even do traditional lending, it is more of a trading operations firm with investment banking.
    Sep 10 09:36 AM | 6 Likes Like |Link to Comment
  • Rates Rising, Preferreds Falling - Should You Buy? [View article]
    Thanks for reading. I'll address some of the comments. While preferreds with perpetual dividends are the most sensitive, you have to look at it on a relative basis. Investment grade preferreds have fairly decent yields now. Some of you advocate waiting for a further drop. There is nothing wrong with this. I do believe preferreds could fall further, but not as much as the decline over the past few months. Keep in mind it's all about the time value of money. If investors are waiting to buy preferreds at a lower price, they will have to sacrifice the potential gain of dividends over that period. The other important part to note is that given the chance of preferreds further falling, investors must be happy with the yield they buy in at. For example, if an investor locks in a yield of over 7% for an investment grade preferred, they need to make sure they are happy with that yield going forward.
    Sep 9 03:24 PM | Likes Like |Link to Comment
  • A Stable 8% Yield For Your Retirement Portfolio [View article]
    Agreed, thanks for bringing that up, I am actually working on an article which will talk about the hotel reit preferreds. This will go over dividend coverage as well. As for Hersha, they made $71 million in operating cash flow last year. The total dividends paid this year will be $66 million, which includes common stock. However, the common stock is not an obligation unlike the preferreds. In fact HT only needs to pay out 90% of its net income to be considered a REIT. So the common dividend has its risks.
    Aug 30 03:51 PM | Likes Like |Link to Comment
  • A Stable 8% Yield For Your Retirement Portfolio [View article]
    Well E has a higher yield on par so its not a very good comparison. AHT-E is 9%, while HT-B is 8%. Market is justifying a premium because of that. A better comparison is the 8% AHT preferred. This is only about a 60 cent premium. Not a drastic difference between this and HT-B.
    Aug 29 01:37 PM | Likes Like |Link to Comment
  • A Stable 8% Yield For Your Retirement Portfolio [View article]
    I like AHT, but the preferreds are trading above par so I won't start looking at them until there is an additional correction.
    Aug 29 12:46 PM | Likes Like |Link to Comment
  • A New 9.75% Preferred - What Investors Should Know [View article]
    Good addition, Harry. I don't think GDP will have a problem refinancing the bonds. The issue will be what will interest rates be in 2019. How will the credit markets be? If they run into a liquidity problem, that could be a whole other situation.
    Aug 22 02:59 PM | Likes Like |Link to Comment
  • SL Green Realty: Get A 7%-Plus Yield On New York Real Estate [View article]
    While a 6.5% coupon does seem light. I believe every preferred's quality is attributed to the underlying assets. I believe DLR has a higher interest rate due to its niche area. They specialize in technology real estate for items such as server space and other items. SLG is more about office, which is a much larger market. I think the office market in NYC is much more stable than that of a technology real estate company. Althought the coupon is 6.5%, the yield on cost is now greater than 7%. I believe it's an incredibly attractive preferred because of the space the company operates in.
    Aug 21 04:44 PM | Likes Like |Link to Comment
  • SL Green Realty: Get A 7%-Plus Yield On New York Real Estate [View article]
    The Goodrich preferreds? The symbol is GDP-D, but this varies depending on broker. It could be GDP-PD, GDP PRD. You would need to ask your broker how they name preferreds.
    Aug 21 12:03 AM | Likes Like |Link to Comment
  • A New 9.75% Preferred - What Investors Should Know [View article]
    berloe,

    Some of these yields can be considered tax-free because it could be related to a return on capital. This means your cost basis will decline and while you won't have to pay taxes now, you will have a future tax liability. The whole K1 situation in this case is pretty confusing and you would have to consult with a tax advisor in this case. The reason why I like preferreds is because they are considered dividends, so there is more simplicity involved. However, this is more related to MLPs and other companies that issue K1s, but if you are talking about munis, then yes you wouldn't have to worry about cost basis or K1s. I do believe its beneficial to have some exposure to munis, especially in the state you reside in, just as long as the state can sustain a balanced budget.
    Aug 20 11:26 AM | Likes Like |Link to Comment
  • A New 9.75% Preferred - What Investors Should Know [View article]
    I read up on it. What Goldman did was just disgraceful. This is why it's important to read the fine print. Most REIT preferreds have a clause now, which states that in event of a buyout, the preferreds are called early at par. This isn't too big of an issue if you buy under par, but what happened with Equity Inns is just crazy. I can't even imagine with what went through the minds of preferred holders at the time.
    Aug 19 04:28 PM | Likes Like |Link to Comment
  • A New 9.75% Preferred - What Investors Should Know [View article]
    I was only comparing the two in the sense of risk, not necessarily as an apples to apples comparison. Thanks for reading.
    Aug 19 12:28 PM | Likes Like |Link to Comment
  • Stay Away From These Preferreds, Buy The Common Instead [View article]
    I didn't just mean stock appreciation, but dividend growth as well. I would hate to be in a situation where the common for a stable REIT has a higher yield than the preferred.
    Aug 17 03:32 PM | Likes Like |Link to Comment
  • Stay Away From These Preferreds, Buy The Common Instead [View article]
    Yes it is listed as shareholder's equity. I thought you meant its equity in the company like common stock. Simple misunderstanding.
    Aug 15 11:15 AM | 1 Like Like |Link to Comment
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