This is a follow-up letter to those people who asked for the Preferred Stock & ETD Securities Spreadsheet from I Prefer Income. I hope that you have been able to open and use the Spreadsheet. I update it daily and make it available to I Prefer Income members. This is a free membership located at: www.ipreferincome.com . Besides the spreadsheet, there is much more information on the website. Hope you visit and take advantage of the resources.
About the “I Prefer Income” Spreadsheet
The “I Prefer Income” Spreadsheet is a research tool that provides focused information on all preferred stocks and ETD (Exchange Traded Debt) securities with a par value of $25 (convertibles not included). The Spreadsheet contains basic information and financial metrics on both the preferred stock & ETD security as well as the company that issued (or is currently responsible) for the security. This information will help provide the investor with the means to rate each security for safety, price, yield and timeliness so that risk/reward can be identified before making a buy/sell decision.
The Preferred Stock & ETD Securities Spreadsheet contains over 600 securities along with the parent company that is responsible for the security. This is not a simple list of securities. It provides a large amount of financial metrics, including both GAAP and Non-GAAP earnings. Some of the metrics include: 5 years & quarters of earnings, common stock dividend payout ratios, preferred stock dividend payout ratios, cash flow ratios, interest coverage ratios, debt ratios, price to book ratios and more.
With so much information, a filter has been added to allow the user to select up to 15 criteria to narrow the list. Example: I am using the filter to add 4 criteria:
• Type: Traditional Preferred cumulative stock
• Price: < ( less than) $25
• Yield: > (greater than) 6.5%
• Stock Div Payout: < (less than) .90
After the 4 criteria are entered and the Filter button clicked, 71 issues are displayed in the spreadsheet dated 2/8/2017. Now you can review those issues to see if they meet your investment requirements.
Update of Preferred Stocks & ETD Securities
As of 2/8/2019, the I Prefer Income Spreadsheet contains the following:
• Traditional Preferred cumulative stocks: 276
• Traditional Preferred non-cumulative stocks: 143
• Trust Preferred: 18
• ETD: 168
• Issues with price under $25: 316
• Issues with yield greater than 7%: 230
The “I Prefer Income” Spreadsheet also tracks all companies that have increased their common stock dividends every year for 5 or more years. We have named these companies as “Dividend Diamonds” and we list the number of years these companies have increased their common stock dividends. A Dividend Diamond is a positive metric that identifies a company as being strong enough to raise their dividend on a regular basis. There are currently 174 issues where the parent is designated as a Dividend Diamond.
We also track changes in common stock dividends. There are several companies listed on the I Prefer Income Spreadsheet that made announcements of changes in their dividends over the last week. Increases are great. Decreases may be cause for concern.
COMMON STOCK DIVIDEND INCREASES
ALL: Raised dividend from .46 to .50
BPR: Raised dividend from .315 to .33
KMPR: Raised dividend from .24 to .25
OAK: Raised dividend from .70 to .75
PRU: Raised dividend from .90 to 1.00
RNR: Raised dividend from .33 to .34
COMMON STOCK DIVIDEND DROP
PBI: Lowered dividend from .1875 to .05
Seeking Alpha has a lot of great authors that write very informative articles on all investment subjects. I especially appreciate and read the articles on income investing. Personally, I focus on higher yielding investments that “normally” do not have a lot of appreciation potential. There are exceptions, but normally, the higher the yield, the less likely there is for appreciation unless you buy when the stock is depressed, such as during the market drop in December. Suddenly, the opportunity for high yield and appreciation was available.
One of the authors I like is Rida Morwa. He writes about high yield opportunities. This week he wrote an article entitled “Global Economy Slows, Grab for Yield Will Accelerate”. If you have not already read it, you might take a minute to read it. SA only makes these articles available for 10 days, so better hurry. Here is the link:
SPREADSHEET FINANCIAL METRICS
Profit & Loss
In my last email, I wrote about the Profit & Loss (5 Yrs / 5 Qtrs) metric found in Column A & B. I also mentioned that the Spreadsheet has a macro that allows you to click on the cells in column A & B to display the historical record for both GAAP & Non-GAAP earnings. Unfortunately, the macro was not working at that time. Sorry. I hope you give it another try.
One thing to always keep in mind is that companies must report in GAAP (Generally Accepted Accounting Principles) for tax purposes; but for many, GAAP earnings are not representative of their true earnings or their ability to distribute dividends. For those companies, they turn to Non-GAAP earnings or cash flow. So when an investor is looking at determining the health of a company they are considering investing in, they must look at both GAAP and Non-GAAP results. To determine if a company reports Non-GAAP earnings, look at column E (Type Payout). A company that reports in GAAP, Cell E will show EPS (Earnings Per Share). Anything other than EPS will mean the company also reports in Non-GAAP. To see both, click your mouse on cell A or B and you will see a pop-up that shows both. An example is shown below. AHT reports Non-GAAP of AFFO (Adj Funds From Operations). Once you click on cell A or B, you will see that pop-up that displays EPS on top row and AFFO on bottom row. The difference is extreme. So make sure to use the macro in A & B to see the 5 year financial history.
TTM Stock Dividend Payout
Column F displays TTM (Trailing 12 months) Stock Dividend Payout. Simply put, it is the ratio of the common stock dividend compared to the earnings that are available to pay the dividend. It is very clear that you want the dividend to be less than the earnings so you are looking for payout of less than 1 (meaning 100%). This is one of the more important ratios. The lower the ratio the more sustainable the common stock dividend is. A healthy company is able to pay their common stock dividend; and even better, to increase the dividend over time. One thing to remember is that this ratio refers to the common stock dividend, not the preferred stock dividend. That ratio is reported in column G. More on that next week.
How to obtain the Preferred Stock & ETD Securities Spreadsheet
There is no charge for the I Prefer Income Spreadsheet. If you have received this article by email, I have attached the current spreadsheet. You can also go to www.ipreferincome.com and subscribe for a Free Membership. Once a member, go to the Spreadsheet page where you can download the file. I update the file every day after the market closes. In addition to the Spreadsheet, the website contains a great deal of information on preferred stocks and ETD securities. Please forward this email to friends or family members who are interested in income investing. They may find it helpful.
Let me know if you have any questions.
I Prefer Income