Dividend Duo: Non-Rated Preferreds
04/21/2017 2:50 am EST
We’re adding two non-credit-rated preferreds to the portfolio. Keep in mind that issuers must pay to have their preferreds credit-rated.
Thus, the fact that a preferred is not rated means only that the issuer didn’t choose to pay for a rating. They’re not necessarily more risky than rated preferreds.
PennyMac Mortgage Investment Trust 8.13% Series A (PMT-A)
PennyMac is a mortgage REIT that primarily invests in distressed (delinquent) mortgages secured by residential properties.
Issued 3/2/17, these preferreds are cumulative, meaning that PennyMac remains on the hook for any missed dividends. The market yield is 8.0% and the yield to the 3/ 15/24 call date is 7.9%.
Spark Energy 8.75% Series A (SPKEP)
Spark is an independent natural gas and electricity provider serving customers in 19 states. Issued 3/18/17, these cumulative preferreds are paying an 8.5% market rate and the yield to their 4/15/22 call date is 7.9%