Using spreadsheet filter to identify top choices

Being an income investor with a preference for safety and higher yields, I had been tracking preferred stocks, ETD securities, BDC, MLPs, REITS, MREITS, and CREITS for years. I soon realized that I needed additional information to do my own quality research. What I needed was access to a database full of information and financial metrics, including GAAP and Non-GAAP metrics.

With this in mind, here is an example of a challenge many are facing and how a good data source like I Prefer Income can help.

What if you just inherited $50,000 and want to identify and invest in several securities that are reasonably safe and generate income with above average yields? You are retired and already have a portfolio of income generating stocks and bonds and have decided to invest this new money in a few preferred stocks and ETD securities to get more diversity in your income portfolio.

You have done your homework over the years and have a basic understanding of some of the important metrics that are used to identify companies that are financially healthy. Luckily, you have access to the IPI! spreadsheet of preferred stocks and ETD securities that contain a filter program that can search for and locate securities with your preferences.  Soon I open the spreadsheet, the filter and submit my criteria of:

1 Price of less than $26
2 Yield greater than 6%
3 Yield to call greater than 6%
4 Stock dividend payout ratio of less than .8
5 Preferred stock payout ratio of less than .8
6 Company must be a dividend diamond (5 or more years of consecutive dividend increases)

You have decided to search for companies where the price wasn’t too far above the call price as long as the yield was above 6% and the yield-to-call was also greater than 6%. You had learned a long time ago that yield was important, but to always know what the yield-to-call was so you would not get surprised when or if the security was called. In the current market, many preferreds and ETD securities have gone past the call date, so they could be called at any time. Thinking that the forward yield displayed today will last forever could just be wishful thinking. Hope for the best, but plan for the worst.

A couple seconds after submitting the criteria, the results were display . It showed 6 companies (gray rows) with a total of 10 securities located directly under the parent company. Those 6 companies and their 10 issued preferred stocks met all of the criteria that was required. The parent companies and issued preferreds were: BFS, ENB, INN, NGHC, SOHO and SRC.

Here is  a summary of the results as well as the full report showing a volcano of information and financial metrics in the 2nd table below.

Summary / As of 9/11/18

Full Report / as of 9/11/18

The results show 6 companies with 5 traditional preferreds, 3 non-cumulative preferreds and 2 ETD securities. The 10 issued securities have yields between 6.4% and 7.8% with yields-to-call of 6% to 8.5%. All 6 companies earn the designation of being Dividend Diamonds with ENB having the best record of 22 consecutive years of increasing dividends. All report good stock payout ratios of under .80 and preferred payout ratios of even lower.

The bottom line is that investors are wise to get as much investment advice and help from as many sources as possible. Analysts, including SA authors, provide valuable information. The more you read the more you will learn. Don’t limit yourself to just reading what others are recommending. Learn to be a fisherman so you do not have to obtain your fish from others. Find your own sources of data such as I Prefer Income and begin to “rely on yourself” to do your own research and make your own investment decisions.

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