TSY-PC undervalued preffered
Preferred stocks are the one of the most overlooked investments. Large investors tend to stay away from them because of liquidity issues and the size of outstanding shares. Small investors usually do not know where to look for these stocks. And if they do, they do not how to analyze them. Luckily, I've done some research and found an undervalued preferred stock.
TSY-PC (Trustreet Properties) is a 7.5% convertible, cumulative preferred stock with a liquidation value of $25. This means it pays a $1.875 ($25*.075) dividend every year. Obviously, as the stock price goes below $25, the dividend as a percentage goes up. Currently, the stock is trading around $21. This means you are getting about a 9% dividend. Pretty good.
Also, at any time you can convert this preferred stock into 1.28205 shares of the parent
company TSY. At the present time, TSY trades near a 52-week low of $12.5. So, obviously it doesn't make sense to convert them. But, essentially on top of the 9% dividend, this is lottery ticket that comes with buying these shares. For example, if by chance TSY stock rebounds and goes to say $19.5, the preferred stock will trade around $26. TSY, after 2/25/2009, has the right to buy these shares for $25. So, now the only thing you have to worry about is TSY going bankrupt and potentially losing all of your investment.
TSY is a REIT that owns restaurant properties. The company is very stable and has nearly $1 billion is shareholder equity. So, the company isn't going to go away anytime soon. In the very rare case of bankruptcy, preferred shareholders are next in line after debt holders. So, that's why shareholder equity is important to look at when you analyze any preferred stock. This is a great investment for people looking for some income with the added upside of owning a stock. I own 500 shares at around $20. A great place to look for preferred stocks is http://www.quantumonline.com/
TSY-PC (Trustreet Properties) is a 7.5% convertible, cumulative preferred stock with a liquidation value of $25. This means it pays a $1.875 ($25*.075) dividend every year. Obviously, as the stock price goes below $25, the dividend as a percentage goes up. Currently, the stock is trading around $21. This means you are getting about a 9% dividend. Pretty good.
Also, at any time you can convert this preferred stock into 1.28205 shares of the parent
company TSY. At the present time, TSY trades near a 52-week low of $12.5. So, obviously it doesn't make sense to convert them. But, essentially on top of the 9% dividend, this is lottery ticket that comes with buying these shares. For example, if by chance TSY stock rebounds and goes to say $19.5, the preferred stock will trade around $26. TSY, after 2/25/2009, has the right to buy these shares for $25. So, now the only thing you have to worry about is TSY going bankrupt and potentially losing all of your investment.
TSY is a REIT that owns restaurant properties. The company is very stable and has nearly $1 billion is shareholder equity. So, the company isn't going to go away anytime soon. In the very rare case of bankruptcy, preferred shareholders are next in line after debt holders. So, that's why shareholder equity is important to look at when you analyze any preferred stock. This is a great investment for people looking for some income with the added upside of owning a stock. I own 500 shares at around $20. A great place to look for preferred stocks is http://www.quantumonline.com/
posted by Amit Dhuleshia at 9:55 AM
4 Comments:
Can you buy it through a brokerage? I can't find it on google finance or through my broker's website
Yes, you can. Sometimes the brokerage has different symbols for them. What brokerage do you have?
REIT's have gone up significantly in the last couple of years. They have generated double-digit returns. Why is TSY underperforming? Also their FCF looks pretty bad. Your thoughts?
You are correct. Reits have performed well the last few years. I would NOT buy TSY stock. They will probably have to reduce their dividend because of their reduced FCF. However, I think the preffered stock is still a bargain. Whatever happens, TSY will pay some kind of dividend. If they pay dividend to the common shareholders, then they will have to pay dividend on the preffered.
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