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New Preferred Stock IPOs - April 2018

May 01, 2018 6:06 PM ETECC, ET, OFS, SJI26 Comments


  • Four new preferred stocks were introduced during April, offering an average annual dividend of 6.9 percent.
  • There are currently 121 high quality preferred stocks selling for an average price of $24.58 per share (investment grade, cumulative dividends).
  • 70 of these high quality issues are now selling below their $25 par value, offering an average current yield of 6.0 percent.
  • U.S.-traded preferred stocks are now returning an average current yield of 6.8 percent.

Conditions in the U.S. preferred stock marketplace continue to favor buyers. Falling prices have delivered higher dividend rates for new issues and increasing yields for previously introduced shares.

Another noteworthy milestone was reached during April for income investors. Often cited as a predictor of the dividends to be offered on newly introduced preferred stock, the 10-year Treasury note blew through the magic three percent threshold on April 24 for the first time since July 2011.

While the extent to which new preferred stock dividend rates and the 10-year Treasury yield are related is actually questionable (see "How Well Do Government Money Rates Predict Preferred Stock Dividend Trends?" for correlation values), there is a certain body of historical research indicating that when the 10-year moves above three percent, the risk/reward math starts to turn away from value (common stock) investors to favor income investors (bonds, preferred stocks).

April's new issues

April's four new preferred stocks are offering an average annual dividend (coupon) of 6.9 percent for the consideration of preferred stock investors.

Note that I am using IPO date here, rather than the date on which retail trading started. The IPO date is the date that the security's underwriters purchased the new shares from the issuing company.

A special note regarding preferred stock trading symbols: Annoyingly, unlike common stock trading symbols, the format used by exchanges, brokers and other online quoting services for preferred stock symbols is not standardized. For example, the Series A preferred stock from Public Storage is "PSA-A" at TDAmeritrade, Google Finance and several others but this same security is "PSA.PR.A" at E*Trade. For a cross-reference table of how preferred stock symbols are denoted by sixteen popular brokers and other online quoting services, see "Preferred Stock Trading Symbol Cross-Reference Table."

There are currently 121 high quality preferred stocks

This article was written by

Whether you are the kind of investor who sticks with preferred stocks with a CDx3 Compliance Score rated 10 out of 10, or whether your portfolio has room for 9-score-and-lower securities, stay tuned for future articles recapping new IPOs and interesting preferred stock activity that we notice here at the CDx3 Notification Service.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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