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The 8.0% Preferred Dividend Of Mid-America Apartment Communities Is A Great Bargain

Aristofanis Papadatos profile picture
Aristofanis Papadatos


  • Mid-America Apartment Communities' preferred stock is offering an 8.0% dividend, which is safe in my view.
  • The REIT has a strong business model, with consistent growth and a healthy balance sheet.
  • The investors who lock in the yield now will probably be rewarded if/when interest rates decrease.

Business leader woman


The preferred stock of Mid-America Apartment Communities (MAA) has declined 23% since it peaked, in mid-2021. As a result, the preferred stock is currently offering an exceptionally attractive yield of 8.0%. When a stock offers such a high yield, it usually signals that the dividend

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Aristofanis Papadatos profile picture
I am a chemical engineer with a MS in Food Technology and Economics. I am also the author of 2 mathematics books ("Arithmetic calculations without a calculator" and "Word Problems") and perform almost all the calculations in my mind, without a calculator, making it easier to make immediate investing decisions among many alternatives. I invest applying fundamental and technical analysis and mainly use options as a tool for both investing and trading. I have nearly achieved my goal of early retirement, at the age of 45. In my spare time, I follow Warren Buffett's principle: "Some men read playboy. I read financial statements".

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (14)

Qualified divys?
I agree it is a solid and safe investment, but the 5.8% YTW is hardly compelling. I can put my money into a Canvas Annuity 3-year MYGA and get 6.15% risk free.
Trapping Value profile picture
The article is really incomplete without mentioning the YTC of around 5.6%.
Gridbird profile picture
@Trapping Value You are being too kind, TV. And YTC means a lot here. As this wasnt a “MAA issued” preferred anyways. And that likely means it gets redeemed pretty quick as its obvious preferreds arent in companies plans to be a part of their capital structure.
Aristofanis Papadatos profile picture
@Trapping Value Thank you for your comment. I just submitted a correction. If the preferred stock is called in October 2026, it will offer an average annual yield of 5.8%.
Bob-in-DE profile picture
@Trapping Value Ever notice that when the current yield is higher than YTC the focus is on current yield, and vice versa? I see a lot of issues pumped on their obscenely high YTC notwithstanding the fact that they have almost zero chance of being called.

I focus on what I call "yield you're probably going to get." That requires an assessment of the likelihood (and timing) of a call but in most cases that's not so hard to do.
As you are so positive on the company, why wouldn't you invest in the common at a 4 per cent yield but a growing dividend stream and greater caital gain potential ?
@Aristofanis Papadatos

Aristofanis, well done. Very well done! You presented a compelling case on a preferred I would personally not evaluated or considered.

I have been watching MAA common, but, chose to be ignorant about the preferreds.

Thank you. Your work is value added to SA subscribers. I look forward to your future thoughts.
Aristofanis Papadatos profile picture
@grcinak Thank you for your comment. However, I had not realized that the preferred stock may be called in October 2026 or later. If it is called in that month, its average annual yield will decrease to 5.8%. If it is called in 2027 or later, its average annual yield will be between 5.8% and 8.0%, depending on the time of the call.
As the cost of the preferred stock is essentially negligible for the REIT, it is hard to predict whether the preferred stock will be called, especially given the unknown path of interest rates. If interest rates remain high for years, the REIT will have little incentive to call the preferred stock.

Sorry for the correction.
I have to agree with the other commentators about the call risk on this one. Other than that the MAA preferreds are certainly solid.

There are lots of good REIT preferreds out there that are way under par having been issued during low interest rate days - such as ADC.PR; REG.PR; or REXR.PR - to name just a few. They are all quite safe with limited call risk and upside to par if you are looking for a longer term solid income stream.
This instrument can be called in Oct-26. Given the low leverage of MAA, I expect they will refinance with cheap debt. Given it's trading at $53 now and the principal is $50, the expected IRR would be 6.25% until that call date (assuming it will be called). If you have excess cash lying around that you want to put in a deposit, the MAA preferred stock is better. But for me, this return is not interesting enough in today's environment (even though it is risk-free in my opinion). Very nice find though!
27 Sep. 2023
Be careful, MAA.PR.I will be called as soon as possible (10-01-2026) so the "real" yield (YTC) is ~5.60%
Big Fat Dummy profile picture
What’s par on these - $50?
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