Monday, April 21, 2014

Affiliated Managers Group Preferred Stock: Opportunities And Risks

Affiliated Managers Group, Inc. (AMG), an investment management firm, has a $10 billion market cap, with two exchange-traded debt securities (ETDs) currently trading on U.S. stock exchanges. Taking advantage of the low cost of capital available at the time, AMG issued two ETDs, two months apart, in 2012. The most significant difference between the structures of these two ETDs is their call dates.

For risk-averse income investors considering taking a position in Affiliated Managers Group ETDs, the MGR issue consistently offers...

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Monday, April 7, 2014

Goodbye Fed - 2014 Sees Preferred Stock Investors Shed QE Jitter

The number of investment grade preferred stocks selling for a market price below $25 is now at 98, over quadruple the number of choices that were available a year ago. Last year at this time preferred stock investors were faced with extremely high prices, primarily being jacked up by the Fed's QE bond-buying program and fears in Europe that central banks there were going to start grabbing citizens' savings accounts (which they had just done in Cyprus).

But since then, the Fed has started backing out of our market and preferred stock investors are no longer hanging on every word whispered by Fed officials, trying to second-guess what's coming next...

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Monday, February 10, 2014

AG Mortgage Preferred Stocks: Opportunities And Risks

AG Mortgage Investment Trust (MITT), a mortgage real estate investment trust (mREIT), has a $475 million market cap with two preferred stocks currently trading on U.S. stock exchanges. These traditional preferred stocks, neither of which are rated by either Moody's or Standard & Poor's, are offering an average current yield of 8.78 percent (February 7, 2014).

The question for preferred stock investors is whether the lack of independent ratings and the price-reducing effects of an increasing rate environment can be overcome by this mREIT's demonstrated ability to maneuver its portfolio, these securities' 8+ percent, cumulative dividends and a nice capital gain in the event of a downstream redemption...

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Tuesday, December 31, 2013

2013 Delivers Higher Dividend Income At Lower Prices To Preferred Stock Investors

2013 was the year that preferred stock investors have been waiting for. There are now 167 investment grade preferred stocks selling for a market price below these securities' $25 par value, delivering an average 6.82 percent current yield. That's up from a mere 36 such issues providing an average current yield of 5.62 percent a year ago.

And ten of those 167 offer dividend rates (coupon) of at least seven percent. That was unthinkable just a few months ago...

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Tuesday, December 17, 2013

Aflac, Inc. Preferred Stock Redefines Long-Term Income Investing

Aflac, Inc. (AFL), a U.S. supplemental insurance company with a $30+ billion market capitalization, is well known for its very clever duck commercials. Aflac offers one exchange-traded debt security (ETDs) for consideration by preferred stock investors. Trading under the symbol AFSD, the security boasts double investment grade ratings (Baa1/BBB) and offers a 5.5 percent coupon.

In the U.S., Aflac's strategy of offering supplementary insurance has allowed them to, at least for now, sidestep much of the teeth-gnashing that has consumed primary health insurance providers over the troublesome Affordable Care Act. And in Japan, being a supplementary coverage provider has allowed them to do a mega-deal with Japan Post. Because of that deal, Aflac now insures one out of every four households in Japan...

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Monday, November 25, 2013

Aegon, N.V. Preferred Stocks: Opportunities And Risks

AEGON, N.V. (AEG), a Dutch insurance company with a $17.78 billion market cap, has six preferred stocks currently trading including one exchange-traded debt security (ETDs). These six securities, five of which are fixed-rate with one floating rate preferred, have double investment grade ratings (Baa1/BBB). The fixed-rate securities are offering an average current yield of 6.93 percent. The floater is a LIBOR-based floating-rate traditional preferred stock and is currently paying 4 percent.

AEV offers a competitive 6.875 percent dividend and is trading below its $25 par value. And even though it is redeemable, a call seems unlikely since one of AEGON's other preferreds -- AEF -- has a 7.25 percent coupon on 40m outstanding shares and is costing the company much more in dividend expense...

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Tuesday, November 12, 2013

Variable-Rate Preferred Stocks Underperform Their Fixed-Rate Cousins

Over the last ten years, variable-rate preferred stocks have offered consistently lower returns, delivering about half the dividend income as fixed-rate preferreds, at higher risk to investors.

Variable-rate preferred stocks offer the promise of keeping up with interest rates in the event that rates increase. If rates rise, the return paid by variable-rate shares presumably increases as well. There are several variable-rate preferreds trading today that have been around for a decade now, surviving through booms, busts, rising rates, falling rates - you name it. So how has the promise of variable-rate preferred stocks compared to actual performance?...

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