Dividend Detective's Pair of Preferred

09/15/2017 2:54 am EST


Harry Domash

Publisher, DividendDetective and Winning Investing

Harry Domash is an industry-leading expert on income investing. In his latest Dividend Detective, the advisor highlights two new recommendations for from his preferred stock portfolios.

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We’re recommending purchase of  NGL Energy Partners LP, 9.0% Cumulative, Class B (NGL.B). NGL, a Master Limited Partnership (MLP), owns crude oil storage terminals, wastewater treatment stations, and distributes natural gas liquids, propane, and refined crude oil products.

These non-credit rated preferreds were issued 6/12/17 and are cumulative, meaning that NGL remains on the hook for missed dividends.

Last month, NGL Energy Partners (NGL) reported disappointing June quarter results, sinking its common shares around 25%.


The preferreds dropped around $1.00 in sympathy, even though NGL Energy has a strong balance sheet and won’t run short of cash to pay the preferred’s dividends.

Now, the preferreds are paying 9.4% to new money (market yield). The yield to their 7/1/22 call date is 10.1%, the highest we’ve seen for non-speculative preferreds in some time. The only potential downside is that NGL’s dividends require K-1 forms at tax time.

In addition, our new pick for our Preferred Speculator portfolio offers 12% appreciation potential, while paying 9.0%. We’re adding TravelCenters of America LLC, 8.0% Senior Notes (TANNL) to the portfolio.

TravelCenters operates more than 250 travel centers in the U.S. offering diesel fuel and gasoline, truck repair and maintenance services, restaurants, and retail travel/convenience items.

These noncredit rated Senior Notes issued 12/9/14, are in effect, cumulative, meaning that TravelCenters remains on the hook for any missed dividends. The market yield is 9.0%.

The call date is 12/15/17 and the call price is $25.00. Since the preferreds recently traded around $22.24 per share, they probably won’t be called anytime soon.

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