Cumulative dividend income of common vs preferred, especially among the high yielders. NLY has been around a long time and so has NLY-A. If you invest for current income, which has given you a) more income, and b) more reliable income?]]>

Cumulative dividend income of common vs preferred, especially among the high yielders. NLY has been around a long time and so has NLY-A. If you invest for current income, which has given you a) more income, and b) more reliable income?]]>

I also look to buy only at or below par, but I am willing to be flexible when the situation warrants flexibility. On May 16 I bought DFT-PC at $25.18, with YTC at 6.46% (par yield = 6.625%). The underlying business of DFT is growing rapidly and I don't foresee any threat to the dividend in the future, certainly not for the next 5 years.]]>

I also look to buy only at or below par, but I am willing to be flexible when the situation warrants flexibility. On May 16 I bought DFT-PC at $25.18, with YTC at 6.46% (par yield = 6.625%). The underlying business of DFT is growing rapidly and I don't foresee any threat to the dividend in the future, certainly not for the next 5 years.]]>

You only have to look at the history of PSA preferreds[1] to know that preferreds are called.

[1] http://tinyurl.com/z3z...]]>

You only have to look at the history of PSA preferreds[1] to know that preferreds are called.

[1] http://tinyurl.com/z3z...]]>

"They get called...they don't, so yield to call is BS."

It is your claim that is BS. Take a look at the list of called securities at quantumonline.com[1]. So far this year there have been 36 calls. There are many 100s in total in the list.

[1] http://tinyurl.com/h6h...]]>

"They get called...they don't, so yield to call is BS."

It is your claim that is BS. Take a look at the list of called securities at quantumonline.com[1]. So far this year there have been 36 calls. There are many 100s in total in the list.

[1] http://tinyurl.com/h6h...]]>

Lance publishes 2 types of articles.

One is the type that proposes large **possible** returns from the 2x leveraged ETNs from UBS. I believe this is what you referred to.

The other is the type that explains general economic trends and how they can affect securities. In this category was an article that explained the yield curve and how it can affect the profitability of mREITs. I don't have a link to the particular article, but this is what I was referring to. It is simply education.]]>

Lance publishes 2 types of articles.

One is the type that proposes large **possible** returns from the 2x leveraged ETNs from UBS. I believe this is what you referred to.

The other is the type that explains general economic trends and how they can affect securities. In this category was an article that explained the yield curve and how it can affect the profitability of mREITs. I don't have a link to the particular article, but this is what I was referring to. It is simply education.]]>

That is how I read it.]]>

That is how I read it.]]>

There is no common equity in front of preferred. Preferred is always above common in its claim on a company's assets. Perhaps you meant debt?]]>

There is no common equity in front of preferred. Preferred is always above common in its claim on a company's assets. Perhaps you meant debt?]]>

Thanks, I discovered that to be true. I also worked out the logic to compute yields without using the Excel function.]]>

Thanks, I discovered that to be true. I also worked out the logic to compute yields without using the Excel function.]]>

Your method works very well. I compared results for OpF and VERpF which both pay monthly, and AGNCpB.

Symbol __ Excel YTC __ AllStreets YTC

AGNCpB ___ 7.76% ___ 7.65%

OpF ___ 0.36% ___ 0.37%

VERpF ___ 5.77% ___ 5.59%]]>

Your method works very well. I compared results for OpF and VERpF which both pay monthly, and AGNCpB.

Symbol __ Excel YTC __ AllStreets YTC

AGNCpB ___ 7.76% ___ 7.65%

OpF ___ 0.36% ___ 0.37%

VERpF ___ 5.77% ___ 5.59%]]>

Thanks. I am not reinvesting. Can one actually DRIP into a preferred? It has never occurred to me to ask. Anyway, I accumulate cash for my RMD and for opportunistic (re)investment.

I am dependent on Excel for automation, so although financial calculators work, they don't send input to Excel. I will try the AllStreets method, and I am sure that a good enough approximation will be the result. Good enough generally means not buying at a low or negative YTC.]]>

Thanks. I am not reinvesting. Can one actually DRIP into a preferred? It has never occurred to me to ask. Anyway, I accumulate cash for my RMD and for opportunistic (re)investment.

I am dependent on Excel for automation, so although financial calculators work, they don't send input to Excel. I will try the AllStreets method, and I am sure that a good enough approximation will be the result. Good enough generally means not buying at a low or negative YTC.]]>

Thanks, I will try that.

Parenthetically, I found the equation P = f(i,F,N,M) [1] which solves for P given i, but there is no obvious way to solve i = f(P,F,N,M). Not obvious to me, anyway. Investopedia has the same equation and demonstrates an approximation method whereby one iterates until sufficiently close to the solution. Short of writing VBA I don't see any way to do that with Excel.

[1] http://tinyurl.com/gqs...]]>

Thanks, I will try that.

Parenthetically, I found the equation P = f(i,F,N,M) [1] which solves for P given i, but there is no obvious way to solve i = f(P,F,N,M). Not obvious to me, anyway. Investopedia has the same equation and demonstrates an approximation method whereby one iterates until sufficiently close to the solution. Short of writing VBA I don't see any way to do that with Excel.

[1] http://tinyurl.com/gqs...]]>

Current P/AFFO = 20.7

AFFO = P/20.7 = 93.75/20.7 = $4.53

Normal P/AFFO = 17.2

Normal P = 17.2 * 4.53 = $77.90]]>

Current P/AFFO = 20.7

AFFO = P/20.7 = 93.75/20.7 = $4.53

Normal P/AFFO = 17.2

Normal P = 17.2 * 4.53 = $77.90]]>

For those of us interested in REIT preferreds, how do you calculate YTC on a monthly payer like OpF? The Excel YIELD function will not do it.]]>

For those of us interested in REIT preferreds, how do you calculate YTC on a monthly payer like OpF? The Excel YIELD function will not do it.]]>

Some preferreds pay monthly (e.g. OpF). How do you calculate YTC? The YIELD function of Excel will not do it.]]>

Some preferreds pay monthly (e.g. OpF). How do you calculate YTC? The YIELD function of Excel will not do it.]]>

SA author Lance Brofman has published several articles on this topic.]]>

SA author Lance Brofman has published several articles on this topic.]]>

There are of course lots of other considerations, like how well they place their hedging bets.]]>

There are of course lots of other considerations, like how well they place their hedging bets.]]>

Briefly, no, there will not be a 25% profit, or at least not in the way you think. This can be confusing so I will try to explain clearly, for my sake as well as yours.

There are two conversion rights.

The first conversion right is owned by the holder of the preferred, that is, you and me. Quoting directly from the IPO filing[1]:

"The Series C Preferred Shares may be converted by the holder, at its option, into our common shares initially at a conversion rate of 1.8643 common shares per $50.00 liquidation preference, which is equivalent to an initial conversion price of approximately $26.82 per common share (subject to adjustment in certain events)."

Note that the investor can exercise this right today, with LXP quoted at $9.08, even though it would make no sense to do so. If you bought at the $50 liquidation preference of $50, then a break even conversion would require the common to price at $26.82, a far cry from where it is today. LXP common has never traded that high. At today's common close, you would have to buy the preferred at $16.93. Not gonna happen.

The second conversion right belongs to the company. Again quoting directly from the IPO filing:

"On or after November 16, 2009, we may, at our option, cause the Series C Preferred Shares to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. We may exercise our conversion right only if, for twenty (20) trading days within any period of thirty (30) consecutive trading days (including the last trading day of such period), the closing price of our common shares equals or exceeds 125% of the then prevailing conversion price of the Series C Preferred Shares."

If the conversion rate has not changed from $26.82, and if for the specified number of days the closing price has equaled or exceeded 125% of $26.82 (e.g. $33.525), then each share of preferred will be converted to 1.8643 shares of common. The qualification ratio of 125% has nothing to do with the conversion ratio of 1.8643:1.

If you bought at or below the liquidation preference of $50 per share, then you have not lost anything by the conversion, if you can immediately liquidate the common at or above the conversion price. If you bought the preferred at $40 or less then you would have a 25% or greater profit, but this is entirely a function of your preferred purchase price.

I would like to thank you for asking this question. You motivated me to explore this issue and now I think I understand it fully and I hope you do too.

[1] http://tinyurl.com/jak...]]>

Briefly, no, there will not be a 25% profit, or at least not in the way you think. This can be confusing so I will try to explain clearly, for my sake as well as yours.

There are two conversion rights.

The first conversion right is owned by the holder of the preferred, that is, you and me. Quoting directly from the IPO filing[1]:

"The Series C Preferred Shares may be converted by the holder, at its option, into our common shares initially at a conversion rate of 1.8643 common shares per $50.00 liquidation preference, which is equivalent to an initial conversion price of approximately $26.82 per common share (subject to adjustment in certain events)."

Note that the investor can exercise this right today, with LXP quoted at $9.08, even though it would make no sense to do so. If you bought at the $50 liquidation preference of $50, then a break even conversion would require the common to price at $26.82, a far cry from where it is today. LXP common has never traded that high. At today's common close, you would have to buy the preferred at $16.93. Not gonna happen.

The second conversion right belongs to the company. Again quoting directly from the IPO filing:

"On or after November 16, 2009, we may, at our option, cause the Series C Preferred Shares to be automatically converted into that number of common shares that are issuable at the then prevailing conversion rate. We may exercise our conversion right only if, for twenty (20) trading days within any period of thirty (30) consecutive trading days (including the last trading day of such period), the closing price of our common shares equals or exceeds 125% of the then prevailing conversion price of the Series C Preferred Shares."

If the conversion rate has not changed from $26.82, and if for the specified number of days the closing price has equaled or exceeded 125% of $26.82 (e.g. $33.525), then each share of preferred will be converted to 1.8643 shares of common. The qualification ratio of 125% has nothing to do with the conversion ratio of 1.8643:1.

If you bought at or below the liquidation preference of $50 per share, then you have not lost anything by the conversion, if you can immediately liquidate the common at or above the conversion price. If you bought the preferred at $40 or less then you would have a 25% or greater profit, but this is entirely a function of your preferred purchase price.

I would like to thank you for asking this question. You motivated me to explore this issue and now I think I understand it fully and I hope you do too.

[1] http://tinyurl.com/jak...]]>

The tricky bit would be to calculate the number of days to the next coupon payment.]]>

The tricky bit would be to calculate the number of days to the next coupon payment.]]>

Getting quote downloads takes more work but should not be viewed as a daunting process. There is a large user community for the Excel add-in that does the quote downloads, with plenty of help freely given. On the other hand, I am a software engineer so others might have more difficulty with this process.]]>

Getting quote downloads takes more work but should not be viewed as a daunting process. There is a large user community for the Excel add-in that does the quote downloads, with plenty of help freely given. On the other hand, I am a software engineer so others might have more difficulty with this process.]]>