One of the focus points of Income Idea is to provide durable income solutions in a variety of situations and from various asset classes. As I discussed in my announcement yesterday, we can look at equities for income.
One of the companies I follow is Bombardier (OTCQX:BDRAF, OTCQX:BDRBF), and I recently asked fellow Seeking Alpha contributor Dhierin Bechai, author of the AeroAnalysis marketplace service, to collaborate on a research piece. Dhierin did a tremendous job with an overall take on the company, and then I took a look at the stock from the income side. This is my analysis on how income-focused investors may benefit from Bombardier.
In yesterday's guest post article, we looked at Canadian transpiration company Bombardier and its current development projects, including the C-Series and Global 7000 jets.
As we head towards the later parts of the recovery, it is more critical now than ever to be focused on risk management. One of the areas of risk management is where your investments are in the capital structure. Are they near the top of the structure as senior bonds? Or is it the high-risk, high-return ground floor known as common stocks?
In between the ground floor common stocks and the penthouse senior secured bonds live preferred stocks. While they are behind bondholders in case things go sour, preferred stockholders are typically the first equityholders to get paid.
In exchange for being the first equityholders to get paid, preferred stockholders generally do not have voting rights and do not participate in the upside. They do, however, receive a preferred dividend, and must receive dividends before any common stockholders get paid.
Bombardier Preferreds
Bombardier currently has 2 classes of common stocks and 3 preferred stocks. I believe the preferred stocks, in particular, offer an attractive mix of income and some back-end capital appreciation.
