Some of you might find the linked article below about bond volatility interesting.
Bond market volatility is at COVID-crisis levels (axios.com)
I would have thought that REIT preferreds would be getting hammered at the present, but they are holding up about as well as bonds or equities - at least the preferreds that I have looked at.
Yes, interesting. I have 3 REIT preferreds. AHT, one of my two POS stocks, had suspended its -G preferred for 5Q and then paid the large accumulated preferred dividend 4Q21. It has not paid a common dividend since 1Q20 and its 2021 -G preferred was 100% ROC. So Its price is expectedly low at $14.47. But EQC-D is trading at a premium of $25.62 and even my other high yielding 9% preferred NS-C is trading at almost $23.
My guess is at today’s rates, no one is going to electively redeem and so the market for new preferred issues is going to be small, bidding up the prices of those already out there, even though their yields are starting to look low relative to similar risk fixed coupon stuff. If interest (yield) rates were the price driver, my MET-F, with an issue yield of 4.75% would be priced well below its current price of $19.67. Go figure.
I came here to see if anyone was talking about or buying REIT preferreds again. I started dipping my toes in the water this week. Some low coupon quality preferreds (DLR preferreds as an example) are selling far below par. I have some orders in for low coupon PSA preferreds but none have hit yet. Yes, we are in a raising rate environment and I don’t believe (or maybe hope) we will return to ZIRP but I do believe that we will retrace roughly half of the current interest rate increase. Based upon that view, I am interesting in quality preferreds yielding greater than 6% selling well below par. I like the idea of collecting a safe (IMO) dividend and waiting a few/several years to collect a capital appreciate gain once interest start to retrace some of their 2022 move upward (when I sell). It was a different time, but I have fond memories buying preferreds well below par at sky-high yields and later selling above par while others were called away. Hoping to capture a mini-repeat. Anyone else investing new dollars in REIT preferreds?
You raise good points. But keep in perspective, inflation. Pure fixed income, such as private pensions, those who own single premium immediate annuities and those holding shares of preferred stocks…these recipients are the ones paying for the inflation we are in.