Preferreds with High Yields

12/01/2006 12:00 am EST


Richard Lehmann

Publisher, Forbes/Lehmann Income Securities Investor

Income expert Richard Lehmann recommends a litany of high yielding investments each month to his subscribers. In his latest missive, he points out two preferred stocks that he targets for continuing growth opportunities …

Boeing Company, 6.125%; Par $25.00; Current Price $24.70; Current Yield 6.20%; Exchange NYSE; Rated A3/A; Call 04/09 @ $25.00; Yield to Call 7.20%; Pay Cycle 2/8; CUSIP 22082Q206; Family Third Party Trust Preferreds; Acronym CorTS; Symbol HYM (no preferred designation). This hybrid is frequently listed under the depositor’s name, Structured Products Corp. These Corporate-Backed Trust Securities (CorTS) Certificates were issued by CorTS Trust, whose assets consist of $40 million worth of 6.125% notes due 02/15/33, issued by The Boeing Company (BA). Boeing is the world’s largest aerospace company, the second-largest manufacturer of commercial jets and the country’s number two defense contractor. In addition to its manufacturing operation, the company and its subsidiaries research, develop, produce, and support space and defense systems including military aircraft, helicopters, and missile systems. The company also provides support services to the commercial airline industry. Boeing Company reported third quarter revenue of $14.74 billion and net income of $694 million. For the same period 2005, Boeing’s revenue was $12.63 billion and net income was $1.0 billion. This investment grade issue is for low-risk income investors. Buy at or below $25.00.

PMA Capital Corp, 8.50%; Par $10.00; Current Price $10.30; CurrentYield 8.25%; Exchange AMEX; Rated B3/B; Call 06/08 @ $10.00; Yield to Call 6.39%; Pay Cycle M; CUSIP 693419301; Family Pet Bonds; AcronymSenior Notes; Symbol PMK (no preferred designation). These monthly pay Senior Notes due 6/15/18 were issued by PMA Capital Corp (PMACA), a property and casualty insurance holding company. It offers property and casualty reinsurance, workers’ compensation and to a lesser extent, other standard lines of commercial insurance. The company has had a rough several years including a denial of dividend payments in 2004 and 2005 under an agreement with

the Pennsylvania Dept. of Insurance. As of June 30, 2006, PMA’s total outstanding debt was $148.3 million, compared to $196.2 million on December 31, 2005. The company’s revenue for the third quarter 2006 was $111.9 million versus $117 million for the same period 2005. PMA Capital posted net income of $1.5 million for this year’s second quarter compared to net income of $74,000 in 2005. The company is getting stronger and will likely see rating upgrades. This issue would be a good investment for high-risk income portfolios. Buy at or below $10.50.”

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