this is a preferred stock, not a closed end fund, but what a payer! | Closed-End Funds Message Board Posts

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Msg  18977 of 19222  at  7/19/2019 11:00:40 AM  by

lumpygravy

The following message was updated on 7/19/2019 11:02:14 AM.

 In response to msg 18976 by  rrbv
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Re: this is a preferred stock, not a closed end fund, but what a payer!

 
"...Sounds like a great stock to own. Any comments?"
 
I jumped all over ALLYprA last December when it traded below par.
Since then it has traded back up in to the mid-$26s.  Since this issue
is past the first redemption date, it can be called at any time. Thus, 
paying too far above par could create a capital loss should the issue
be redeemed.
 
At the current price of roughly $26.40 it is trading three dividends
above par. Thus, not a compelling buy at this time, in my opinion.
 
ALLYprA is a floating rate preferred with a quarterly dividend that
is variable. As you mentioned the next dividend is .5305 with ex-div
on 8/13. 
 
The dividend rate is 3-month LIBOR plus 5.785%.
 
ALLY just reported a very nice quarter so I'm thinking that they 
will not redeem the preferred any time soon. However, one can't be
certain!
 
My "general rule" regarding preferred issues which trade above par
is to sell when the unrealized cap gain reaches one year's worth of
dividends. In this case, ALLYprA would need to trade above $27 for
me to be a seller. 
 
And of course, the 8% yield is commensurate with its 'B' junk rating.
 
Good luck!
 
 
 
 
 
 


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Replies
Msg # Subject Author Recs Date Posted
18978 Re: this is a preferred stock, not a closed end fund, but what a payer! ex_hacker202 0 7/19/2019 1:54:51 PM
18979 Re: this is a preferred stock, not a closed end fund, but what a payer! ed81 0 7/20/2019 6:59:59 AM


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