This newsletter is provided to those people who have an interest in income investing and in preferred stocks and ETD securities. Remember that the spreadsheet is updated every day after the market closes. It is available for download to all members. Memberships are FREE and are available at: www.ipreferincome.com . If you are just learning about Preferred stocks and ETD Securities, the website contains a wealth of information that will help you understand these securities and all of the financial metrics found on the spreadsheet.
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 stocks & ETD securities, 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 610 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 & 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:
• Price: < (Less than) 25.00
• Yield: > (Greater than) 6%
• Yield-to-call: > (Greater than) 7%
• Quarters profitable: > (Greater than) 4
Once submitted, there were 36 issues that met these 4 criteria. Take a look at the filter below to see those 4 criteria. This set of criteria found issues with a price of less than $25, a yield greater than 6%, yield-to-call greater than 7% and were profitable 5 of the last 5 quarters. Once the list of securities is shown, you can go over each issue to see if it meets your investment requirements.
“I Prefer Income” Website
Preferred stocks and ETD securities are different from common stocks. Most investors buy for the income they generate and because they are safer than the common stock dividend paid by the parent. In general, ETD securities are safer than preferreds and preferreds are safer than common stock. To learn more, go to our website at; www.ipreferincome.com and click on Basics to learn more about both securities. There is a lot to learn. Then click on Info to learn more about the IPI! spreadsheet. This page includes 4 Youtube videos for step by step info on the program. The Spreadsheet provides a variety of Financial Metrics to help determine the strength and safety of the parent and each issue. To learn more about what each metrics means, click Info and then Metrics.
Update Preferred Stocks & ETD Securities
As of 2/15/2019, the “I Prefer Income” Spreadsheet contains the following:
• Traditional Preferred cumulative stocks: 283
• Traditional Preferred non-cumulative stocks: 145
• Trust Preferred: 18
• ETD securities: 169
• Issues with price under $25: 295
• Issues with yield greater than 7%: 226
Most income investors look for dividends that are sustainable, reliable, and safe. Here are some metrics that help identify these characteristics.
• 5 Profitable Years: There are 316 issues where the parent has been profitable 5 out of the last 5 years.
• 5 Profitable Quarters: There are 293 issues where the parent has been profitable 5 out of the last 5 quarters.
• Dividend Diamonds: There are 193 issues where the parent has raised their dividends 5 or more consecutive years in a row
• Common Stock Payout Ratio: There are 411 preferred issues where the parent common stock dividend payout ratio is less than .90 (90%)
• Preferred Stock Payout Ratio: There are 413 preferred issues where the parent preferred stock dividend payout ratio is less than .50 (50%)
• Operating Cash Flow Payout Ratio: There are 290 preferred issues where the parent operating cash flow payout ratio is less than .10 (10%)
The “I Prefer Income” Spreadsheet 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 193 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
• BPOP: Raised dividend from .25 to .30
• SF: Raised dividend from .12 to .15
• ARES: Raised dividend from .28 to 32
• PPL: Raised dividend from .41 to .4125
• REXR: Raised dividend from .16 to .185
• ARCC: Raised dividend from .39 to .40
COMMON STOCK DIVIDEND DROP
• CTL: Lowered dividend from .54 to .25
• NEWT: Lowered dividend from .50 to .40
• MCC: Lowered dividend from .10 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 appreciate is Rida Morwa. He writes about high yield opportunities. This week he wrote an article entitled “What is Dividend Yield”. If you have not already read it, you might take a minute to check it out. SA only makes these articles available for 10 days, so better hurry.
There are 4 macros on the spreadsheet that are tools to help the investor.
User Guide: Click on the User Guide and the macro will point out various areas of interest.
Filter Securities: Click on the Filter Securities button to display the filter pop-up with 15 criteria you can use to narrow your search.
Profit & Loss Table: Use mouse to click on the yellow cell B or C to display the last 5 years and 5 quarters of GAAP or Non-GAAP earnings.
Dividend History: Click on the Yellow AD cell to open the last 5 quarters of dividend payments.
Preferred Stock Dividend Payout Ratio
Column G displays TTM (Trailing 12 months) Preferred Stock Dividend Payout. Simply put, it is the ratio of the preferred stock dividend compared to the earnings that are available to pay the dividend. It is clear that you want the dividend to be less than the earnings so you are looking for payout of much less than 1 (meaning 100%). This is one of the more important ratios. The lower the ratio the more sustainable the preferred stock dividend is. A healthy company is easily able to pay for their preferred stock dividend. I personally like to see the payout ratio less than .10 (10%).
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.
Thanks. Rich Hill
I Prefer Income