Any suggestions of quality preferred stocks that are REIT issued with some short term expiration dates?Thanks, Bill
Any suggestions of quality preferred stocks that are REIT issued with some short term expiration dates?What do you mean by 'expiration' date? I'm curious because most preferred stocks have call dates, where they can be called at the issuer's option, on or after that date. But the 'after' can be years after, or never.If you are looking for preferred stocks from an issuer that has made a practice of calling their preferreds on a regular basis, I would look to PSA (Public Storage).AJ
Excuse my terminology...I meant call date.Bill
I meant call date.And why are you looking for 'short term' call dates? Do you want to be sure that you are going to get the a certain amount back as of the call date, without having to sell the investment? (That's what it sounded like when you said 'expiration' date.) If that's the case, then you may not be satisfied with investing in preferred stocks. As already mentioned, just because the issuer 'can' call the issue doesn't mean that they 'will' call the issue.If you are looking for investments where you will get a specific amount back as of a specific date, you probably want to look at bonds, exchange traded debt or target maturity date bond ETFs.AJ
If you want your money back then you should look at short-term bonds. The preferreds may or may not be called, and some of the higher coupon ones that I expected to be called are not getting called.
"The preferreds may or may not be called"Agreed!!!Over the last decade, the majority of preferreds have been called due to falling interest rates. The majority of those existing ten years ago that haven't been called were issued by highly leveraged, risky and poor performing REITs.Hard to predict the future, but I would bet that the majority of those in existence today won't be called in the next ten years and many not in our lifetimes. Perhaps a few of those higher coupon preferreds could be called when their issuers clean up their acts in a few rare cases and some might be taken out when their issuers are bought out or merged. In most cases, I don't think a near term call date will make much difference over the next few years.
You can find all sorts of information on all sorts of issues at Quantum Online
BillAt the expense of sounding nit-picky, preferred stock are not 'called', they are 'redeemed', and there is a difference. 'Call' is what happens to some bonds and it will be based primarily on the price of the bond. Redemption has nothing to do with price, but is based upon management's projected cost of capital. Interest rates are the most likely cause of a redemption (less annual expense to redeem and reissue a preferred stock at a lower dividend rate), but it can also be due to gradually improving company fundamentals leading to a higher credit rating and the ability to restructure capital financing using debt or even equity in place of fixed dividend preferred stock. This is likely why some preferreds are redeemed in a rising interest rate environment.Almost all preferred stock are issued with a period of non-redemption....usually 5 years. That is why one must be careful in paying more than the redemption price per share if the preferred issue is at or near its 5 year anniversary.But back to your original question. The Preferred Stock Channel is a good place to go to screen for preferred issues that will fit your need.https://www.preferredstockchannel.com/screener/BruceM
At the expense of sounding nit-picky, preferred stock are not 'called', they are 'redeemed', and there is a difference. 'Call' is what happens to some bonds and it will be based primarily on the price of the bond. Redemption has nothing to do with price, but is based upon management's projected cost of capital.Not really. "Redeemed" and "called" are used pretty interchangeably when preferreds are redeemed. For instance, here's PSA's announcement about PSA-Y https://investors.publicstorage.com/file/Index?KeyFile=39684...Public Storage Announces Redemption of All Outstanding Depositary Shares Representing Interests in its 6.375% Cumulative Preferred Shares, Series YCompany Release - 2/22/2019 4:02 PM ET GLENDALE, Calif.--(BUSINESS WIRE)-- Public Storage (NYSE:PSA) announced today that it is calling for redemption all outstanding depositary shares representing interests in its 6.375% Cumulative Preferred Shares, Series Y (NYSE:PSAPrY) on March 28, 2019 at $25 per depositary share. The aggregate redemption amount to be paid to all holders of the depositary shares is $285,000,000.As you can see, they are 'calling for redemption' and it's pretty common for that action to be referred to as 'calling' the stock, as you can see from the quantumonline page for PSA-Y: http://www.quantumonline.com/search.cfm?tickersymbol=PSA-Y&a...Security has been Called for: Thursday, March 28, 2019Additionally, the first date that preferreds can be redeemed is commonly known as the 'call date' - as evidenced by looking at quantumonline pages for preferred stocks. Even the Preferred Stock Channel screener that you provided a link to has a filter for "Time to call date:" AJ
Hi Bill!My experiences rhyme with the comments above. My opinion is that if the coupon yield is below 8%, it won't get called/redeemed UNLESS interest rates start declining again. Which is unlikely in the 'short term', however long that is to you.Are you looking for a place to hold your cash with a 'high' return (> treasuries, etc.)?If you choose to use preferred stocks for that keep in mind they tend to be less liquid than common stocks. Which means you will have to spread your money over multiple companies in order to sell them quickly when you want your money out. And there is the risk of the price declining beforehand.I recommend not buying anything you don't mind holding for longer than your 'short term' just in case.Good luck and please let us know what you come up with so we can all learn a little bit more!-srockaz
Any good baskets for buying preferreds to discuss or review? I haven't looked for ETF yet. Seems like I've seen some CEFs that focus on preferreds but recollection is fuzzy. I need to make a note and go back relook at "basket" options.
My opinion is that if the coupon yield is below 8%, it won't get called/redeemed UNLESS interest rates start declining again. Which is unlikely in the 'short term', however long that is to you.I think your bar should be closer to 5.5% or so. Case in point, Public Storage (PSA) just called PSA-Y, with a 6.375% coupon, because they were able to issue PSA-H with a 5.6% coupon. In the PSA-H prospectus https://www.sec.gov/Archives/edgar/data/1393311/000119312519... it says:We intend to use the net proceeds from this offering to make investments in self-storage facilities and in entities that own self-storage facilities, for the development of self-storage facilities, and for general corporate purposes, including the redemption of our 6.375% Series Y Preferred Shares.AJ
Any good baskets for buying preferreds to discuss or review?I've been pondering this question as well. At this time, my opinion is that preferreds are not a good fit for a cheap unmanaged ETF. I'm thinking that buying a basket of preferreds individually picked by one's self (requiring time and research) or paying up for a CEF that has professionals doing the picking (and perhaps using leverage and other tools) might be the correct approach. Cohen & Steers Select Preferred and Income Fund, ticker PSF seems to me like it might be worth taking a look at, but at this time I'm leaning toward picking my own individual preferreds. Jim
re: Cohen & Steers Select Preferred and Income FundMorningstar showstotal distribution 7.67% total expense 2.4% So that nets 5.27 if in a tax deferred acct. Not sure how exciting that is. Maybe the diversification afforded is comfort that's worth it for some.
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