When investing in preferred shares, it’s important to also look at the “call date” of an issue, as well as the probability of that issue actually being called.

How do you do that? Well, what I do whenever researching any preferred issue, is take a look at the issuing company, the parent if you will. Do my DD on that to determine viability, dividend stability, earnings or FFO or even AFFO, etc. Then you move to the various issues available.

Let’s start with ARIPRA, or ARI-A as Google calls it. One website to use for this is QuantumOnline.com. So, click that link and a new tab will open.

In that new tab you should see a search box, in which you’ll type ‘ARI’ (sans quotes) and then click search to search the ticker symbol of the issuing company.

Under the Company’s Online Profile there is a link to “Find All Related Securities..” so click on that.

Then, click on the symbol ‘ARI-A’ and now you can see more information on the preferred issue.

Lots of good links, and good info.

Do the same for the rest of the preferred shares I own, and the list looks like this;

Preferred Symbol Call Date Maturity Date
ARRPRB 2/12/2018 none
ARIPRA 8/1/2017 none
CLNYPRC 4/13/2020 none
CMREPRD 5/13/2020 none
RSOPRC 7/30/2024 none
TOOPRB 4/20/2020 none

So, even though they all have “call dates”, none have a maturity date which means these shares could pay dividends perpetually. Of course, the company could also call the shares on or after the stated call date.

It all boils down to one thing; this is debt, money the company borrowed from shareholders. If they can get a better rate by issuing another preferred or any other instrument, then they will. If the rate they pay for this issue is higher than their other debt, it might be prudent to retire some, all, or none of this debt. This decision would need to be re-visited as necessary to boost profits and lower expenses.

But, that’s not my decision. My decision was to buy (below ‘par’) and get a reasonable yield, possibly forever. Also my decision to sell and add back when I was harvesting capital gains.

I’m happy with my decisions.


About PandA Trader

I am, I think... "Disobedience, in the eyes of anyone who has read history, is man's original virtue. It is through disobedience and rebellion that progress has been made." -- Oscar Wilde
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