Landmark: A Pair of Preferreds

05/09/2017 2:50 am EST


Roger Conrad

Chief Analyst/Managing Partner, Capitalist Times

The Dow Jones Utility Average yields less than 3.3 percent, a level usually seen when the market is closer to a top than a bottom, cautions Roger Conrad, utility sector expert and editor of Conrad's Utility Investor

Where can investors find big yields with the best chance of consistent payments? Utilities with market caps of less than $800 million don’t show up on most institutional investors’ radar screens and, theoretically, have less exposure to algorithmic trading programs that require high volumes to be effective.

One such company that sports a high yield and has a strategy to grow its distribution over time: Landmark Infrastructure Partners LP (LMRK), which holds leases on the land underneath billboards, renewable-energy installations, and wireless communications infrastructure.

A ground-floor opportunity like this does entail risks — for example, Landmark Infrastructure Partners’ high yield could inhibit its ability to complete drop down transactions. But the distribution looks safe. Aggressive investors can buy Landmark Infrastructure Partners LP up to $17.

As an alternative, investors may want to consider Landmark Infrastructure Partners 7.9% Preferred Shares (CUSIP: 51508J306) and Landmark Infrastructure Partners 8% Preferred Shares (CUSIP: 51508J207), both of which yield about 8 percent and can be called for about $25, starting in early 2021.

Investors who opt for the preferred shares shouldn’t have to file a form K-1 at tax time, and these payouts on these securities are senior to the dividend on the common stock, providing a bit more safety.

However, as fixed-income securities, investors won’t participate in Landmark Infrastructure Partners’ growth story. Aggressive investors interested primarily in locking in a high yield can buy Landmark Infrastructure Partners 7.9% and 8% Preferred Shares up to $25.10.

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