Great Resources for Preferred Stock Investors!





MAY 2020

Issue 158


Subscribe: CDx3 Notification Service

  See Preferred Stock Investor Reviews


Preferred Stock Investing, 5th Edition

  See Reader Reviews


Free Preferred Stock Resources


In This Issue:

High Quality Preferred Stocks

Preferred Stock News

Special Announcement

More Preferred Stock Research




"It's the only serious service that's specifically involved in preferreds in a conservative way.

- from Rania C., CDx3 Notification Service subscriber. See more preferred stock investor reviews here.














by Doug K. Le Du


Preferred stock researcher

SeekingAlpha contributor

PortfolioChannel contributor

Syndicated writer






109 Reader Reviews


See Reader Reviews

Table of Contents

Free Excerpt





































Already a subscriber?

See page 1 of this month's issue of the subscriber's newsletter, CDx3 Research Notes, for symbols.








Top Investment Grade, Cumulative Preferreds Available Under $25


The COVID-19 panic continues to deliver some of the best prices for the highest quality preferred stocks that we have seen since the 2008 Global Credit Crisis. Of the 122 high-quality preferred stocks currently trading on U.S. stock exchanges, 28 are now trading for a market price below their $25 par value, selling for an average price of $24.07 per share (April 30).

The search engine parameters seen in Figure 1 look for preferred stocks and exchange-traded debt securities (ETDS) that are currently trading below their $25 par value, have cumulative dividends (meaning that if the issuing company skips a dividend payment to you, they still owe you the money) and offer investment grade ratings from Moody's Investors Service.


Currently priced below par

Purchasing shares below $25 is an important consideration for many preferred stock investors. In the event that your shares are redeemed (bought back from you) by the issuing company, shareholders will receive the security's par value in cash in exchange for their shares. By purchasing shares below their par value ($25 in most cases and in all of the cases shown here), preferred stock investors are able to add a layer of principal protection to their investment while also positioning themselves for a downstream capital gain in the event of a future call.


Figure 1 shows the complete filter used to find the 28 highest quality preferred stocks available for less than $25. Of the twenty-five preferred stock characteristics that can be set, the four arrows highlight the keys for this search. Setting the "Currently priced below par" parameter to "Yes" does the magic here.



In addition to finding the highest quality issues that offer cumulative dividends and are currently trading below their $25 par value, this filter also limits the list to issues that have not suspended their dividend payments. And by setting "Today's price, at least" to $0.01 and "Today's volume, at least" to 1 share the filter will exclude less liquid issues (securities that have not traded today).

This is just one example. Click on the filter image to see another one along with a more detailed explanation.


The above search finds a total of 28 high-quality preferred stocks that are curently trading on U.S. stock exchanges for a market price below these security's $25 par value.

Figure 2 shows the top 10 results (out of the 28 high-quality securities found) when this search is applied to our Preferred Stock List
TM database (please note that to protect the values of subscriptions to our CDx3 Notification Service, the trading symbols are obscured here). Already a CDx3 Notification Service subscriber? See page 1 of this month's issue of the subscriber's newsletter, CDx3 Research Notes, for symbols.

There were a total of 906 preferred stocks and ETDS' trading on U.S. stock exchanges as the month came to a close (including convertible preferred stocks). Of these 906, there are currently 122 high- quality preferred stocks selling for an average price of $25.43.


And of these 122 high-quality securities, 28 have a current market price (seen in the Last Price column) that is below their $25 par value (as shown in the Liquid Price column) and enjoy an investment grade rating from Moody's, the top 10 of which are listed above.

Keep an eye out for sub-$25 buying opportunities such as those listed here. The lower your purchase price, the more principal protection you'll have.

Please consider becoming a subscriber to our CDx3 Notification Service today. Check out these features:

















COVID-19 Driving New Preferred Stock Buying Strategy


With rates currently bouncing around, underwriters are unable to accurately assess market demand. And for their part, investors are having a hard time assessing risk as businesses have had to idle much of their activity due to COVID-19. When demand for a new income security is unknown and risk is harder to assess, prices fall and the reward side (yields) goes up.

So here we are…no new preferred stocks were issued during April, but with 28 high-quality income securities trading below their $25 par value, who cares? We’re in a market paying higher income for some of the best prices we have seen in years.

The primary reason many buyers prefer newly issued preferred stocks during a period of high prices (e.g. the last several years with very few exceptions) is that they can frequently buy shares on the wholesale Over-The-Counter stock exchange at introduction below the security’s $25 par value. But during a period of lower prices (now), dozens of high-quality issues become available for sub-$25 prices, eroding the attraction of new issues.

But what about the risk? While prices currently favor buyers, assessing the risk associated with any given preferred stock can be tricky, especially since many very attractive preferred stocks are unrated. One approach for assessing risk is described in my article “How to Rate an Unrated Preferred Stock” that may be helpful.

Of the 906 income securities trading on U.S. stock exchanges (including convertible preferred stocks), there are currently 122 high-quality preferred stocks selling for an average price of $25.43 (April 30), offering an average current yield of 6.3 percent.

Today’s COVID-fueled U.S. preferred stock marketplace

The following chart illustrates the average market price of U.S.-traded preferred stocks over the last twelve months. The effect of the COVID-19 pandemic is pretty easy to spot.

Beyond a global virus outbreak, there are many things that affect the market prices of these securities such as the proximity to their call or maturity date, proximity to their next ex-dividend date, industry and/or overall health of the issuer, perceived direction of interest rates, pending government regulatory or policy changes, cumulative versus non-cumulative dividends and tax treatment of dividend payments. So what we really need to look at is current yield, which calculates the average annual dividend yield per dollar invested (without considering re-invested dividend return or any future capital gain or loss). Current yield is a “bang-for-your-buck” measure of value that normalizes differences in coupon rate and price to give us a single, comparable metric.

Moving down the risk scale, the next chart compares the average current yield realized by today’s preferred stock buyers when compared to the yield earned by those investing in a 2-year bank Certificates of Deposit or the 10-year Treasury note.

U.S.-traded preferred stocks are currently returning an average current yield of 7.5 percent (blue line) while the annual return being offered to savers by the 2-year bank CD is at 1.5 percent and the 10-year treasury is offering a paltry 0.6 percent.

Prior to the COVID-19 outbreak, U.S. preferred stocks were delivering an average current yield of about 6.5 percent. At the end of April, COVID-19 is now delivering a 7.5 percent annual return at lower prices. Higher income with cash left over for today’s preferred stock buyers.










See Reader Reviews

Table of Contents

Free Excerpt









Preferred Stock Investing, Fifth Edition

Learn how to screen, buy and sell the highest quality preferred stocks


Preferred Stock Investing is one of the highest reader-rated books in the United States with over 100 reviews posted at Amazon.

The Fifth Edition addresses selecting, buying and selling the highest quality preferred stocks during the market conditions that we are currently facing.

See: Reviews | Table of Contents | Free Excerpt | Paperback | eBook

The Fifth Edition has 21 chapters organized into six Parts over 334 pages. Here are some highlights:

- Part I, "The Preferred Stock Market," introduces a new suite of charts and metrics specifically designed to measure and track the preferred stock marketplace.

- Part III, "Buying the Highest Quality Preferred Stocks," includes several new chapters such as "Buying 'Fed-Free' Preferred Stocks," "Keeping Up with Increasing Interest Rates" and "Buying Less-Than-Perfect Preferred Stocks."

- And chapter 8, "Managing the Risks," has been completely rewritten and expanded to include risks that are unique to preferred stocks during the increasing rate environment that awaits us.

You can pick up a copy of the new Fifth Edition of Preferred Stock Investing at your favorite online retailer such as Amazon (paperback) or directly from BookLocker, the book's publisher (BookLocker provides paperback and PDF eBook formats).













Recent Preferred Stock Articles by Doug K. Le Du


Here is a list of some of my recent syndicated articles. To view an article, just click on the headline.











Book (Preferred Stock Investing)

  - Paperback provided by Amazon

  - eBook PDF provided by BookLocker


Notification Service

  - eMail alert features

  - Spec Sheets

  - Database features

  - Preferred stock search engine features

  - Access to experts

  - CDx3 Research Notes newsletter features

  - Pricing


Free Resources

  - CDx3 Newsletter (published by email the first week of every month)

  - Research article library (hosted by Seeking Alpha)

  - Test your knowledge (online preferred stock quiz)





(c) 2020 Del Mar Research, LLC. All rights reserved.


Trademarks of Del Mar Research, LLC:

  - CDx3 logo

  - Preferred Stock List, CDx3, CD Times 3, CDx3 Income Engine,

     CDx3 Investor, CDx3 Portfolio, CDx3 Preferred Stock


Notification Service

  - Individual Subscription Agreement



The content of this newsletter, and the materials that it links to that are owned by Del Mar Research, LLC, are to be regarded as educational, rather than advisory. There can always be exceptions to trends and/or generalizations that may be presented herein. Consider your financial resources and goals before investing. You, and not Del Mar Research, LLC, are solely responsible for your own investing decisions.