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For New Readers...
Welcome to all of the new CDx3 Newsletter readers who signed up over the last month. This is your first issue of the CDx3 Newsletter, a free monthly newsletter devoted to the interests of CDx3 Preferred Stock investors.
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This month's High Quality Preferred Stocks article describes how June sellers created some of the best buying opportunities that preferred stock buyers have seen in two years. Out of the 948 preferred stocks and exchange-traded debt securities that were trading on U.S. stock exchanges at the end of June 2013, our preferred stock search engine found 21 specific high quality issues selling below their $25 par value. (jump to article)
The Preferred Stock News article identifies the new preferred stocks and exchange-traded debt securities issued during June 2013. While the Fed has made it very clear that investors should not expect a policy change any time soon, June 2013 offered us a reminder of what a Fed-free preferred stock marketplace looks like -- higher dividend income available for lower market prices. (jump to article)
The Special Announcement article announces a new and very powerful subscription program for preferred stock investors. Our Preferred Stock ListTM database and search engine, long enjoyed by subscribers to our comprehensive CDx3 Notification Service, is now available as a separate subscription for do-it-yourself investors. The database includes last trade price, today's trading volume, current yield, ex-dividend dates and much more, all of which can be sorted, downloaded and printed at any time. You can create and save your own filters and watchlists of trading symbols, too. (jump to article)
The Preferred Stock Facts article is presented both here and on the PreferredStockInvesting.com website. Test your knowledge by clicking on any preferred stock question to see the multiple-choice answers. You will receive an automatic email that provides you with the correct answer and my explanation. (jump to article)
The Free Special Offer article explains how you can now have continuing preferred stock research delivered to you for free. Why wait until next month's CDx3 Newsletter to find out what is going on in the preferred stock marketplace? Throughout the month I post regular research articles on the Preferred Stock Investing Reader's Forum and make them available to you for free. (jump to article)
Enjoy this month's issue. I look forward to reporting back to you in next month's issue of the CDx3 Newsletter.
21 Investment Grade, 6+ Percent Cumulative Preferreds Available Under $25
New Preferred Stock Search Engine Finds These 21 Out of 948 Alternatives
June 2013 was a very important month for preferred stock buyers. Reacting to rumors that the Federal Reserve might begin backing out of their Quantitative Easing (QE) rate-lowering program at the June 18-19 meeting of the Federal Open Market Committee (FOMC), sellers who have been paying way above par for their preferred stock shares started to panic.
Even though no change in the QE program was announced, fearful sellers continued their sell off, pushing average high quality preferred stock prices down to pre-QE2 levels during June. The average market price of high quality preferred stocks fell to $25.33 by June 20. The average market price of such securities in November 2010, the first month of phase 2 of the Federal Reserve's Quantitative Easing (QE) program, was $25.35.
With preferred stock prices returning to more normal "Fed-free" levels, the list of high quality bargains available to buyers grew throughout June. Even when I tightened the search engine down quite a bit tighter than you usually read here, the list of high quality preferred stocks available for less than these security's $25 par value continued to grow.
The search engine parameters seen in Figure 1 look for preferred stocks and exchange-traded debt securities (ETDs) that are currently trading below their $25 par value, pay a minimum annual dividend of at least 6.0 percent, have cumulative dividends and offer investment grade ratings from Moody's Investors Service.
Purchasing shares below $25 is an important consideration for many preferred stock investors. In the event that your shares are redeemed (bought back from you) by the issuing company, shareholders will receive the security's par value in cash in exchange for their shares. By purchasing shares below their par value ($25 in most cases and in all of the cases shown here), preferred stock investors are able to add a layer of principal protection to their investment while also positioning themselves for a downstream capital gain in the event of a future call.
Figure 1 shows the complete filter used to find these gems. Of the nineteen parameters that can be set, the four arrows highlight the keys for this search. Setting the "Currently priced below par" parameter to "Yes" does the magic here.
In addition to finding the highest quality issues that are currently trading below their $25 par value, this filter also limits the list to issues that have not suspended their dividend payments. Setting the "Dividend rate at least" parameter (center left under the Dividends heading) to 6.0 eliminates securities with very low, variable or adjustable dividend rates. And by setting "Today's price, at least" to $0.01 and "Today's volume, at least" to 1 share the filter will exclude less liquid issues (securities that have not traded today).
This is just one example. Click on the filter image to see another one along with a more detailed explanation.
Figure 2 shows the results when this search is applied to our Preferred Stock ListTM database (please note that to protect the values of subscriptions to the CDx3 Notification Service, trading symbols are obscured here). Already a CDx3 Notification Service subscriber? See page 6 of the July 2013 issue of the subscriber's newsletter, CDx3 Research Notes, that you received on June 26 for symbols.
There were a total of 948 preferred stocks and ETDs trading on U.S. stock exchanges as June 2013 came to a close. Of these 948, twenty-one specific high quality issues are trading below their $25 par value (June 26, 2013 prices). This list is sorted by dividend rate (coupon) with the highest payers listed first.
The six securities shown in green font are ETDs (bonds that trade on the stock exchange rather than the bond market and are very similar to preferred socks) while the remaining fifteen securities listed are preferred stocks. All have a current market price (seen in the Last Price column) that is below their $25 par value (as shown in the Liquid Price column) and enjoy an investment grade rating from Moody's (the Moody's column).
Keep an eye out for sub-$25 buying opportunities such as those listed here. The lower your purchase price, the more principal protection you'll have. The preferred stocks and ETDs listed in Figure 2 are offering some of the best choices available to you as an income investor.
Please consider becoming a subscriber to the CDx3 Notification Service today.
Already a subscriber? The trading symbols for this example are provided on page 6 of the July 2013 issue of the subscriber's newsletter, CDx3 Research Notes.
Learn To Screen, Buy and Sell The Highest Quality Preferred Stocks
Preferred Stock Investing includes the information, websites and other resources needed for you to be a very successful preferred stock investor. The Fourth Edition is available at your favorite online retailer. For those who would rather someone else do the research and calculations, I offer the CDx3 Notification Service. Subscribers to the CDx3 Notification Service receive an email alert whenever a new preferred stock or exchange-traded debt security is introduced. Subscribers also receive their own non-promotional preferred stock research newsletter every month, have their own website that hosts the Preferred Stock ListTM database and have access to the CDx3 Discussion Group, the only online forum just for preferred stock investors.
Invest in the best. Subscribe to the CDx3 Notification Service today.
5 New Preferred Stocks Clear 7%, First Time Since July 2012
June Panic Provides Higher Dividend Income now Available at Lower Market Prices
The average dividend rate being offered by the new preferred stocks issued during June was 7.05 percent, the first time that new issues have cleared the 7 percent mark since July 2012.
Reaching the 7 percent level implies a certain amount of normalcy or equilibrium within the marketplace for these securities. 7 percent is the long-term average dividend rate (coupon) offered by preferred stocks so, after two years of looking at lower returns, this is an important milestone for income investors .
As Figure 3 illustrates, the 7.05 percent average dividend rate for June's new issues also marks the third straight month that preferred stock investors have been treated to an increase in the dividend income provided by these securities.
Interestingly, only five new preferreds were issued throughout last month, presumably because issuers are waiting to see if prices tick back up after the June sell off (described in the High Quality Preferred Stocks article above). In the event that prices do so, yields will edge back down, hence reducing the dividend rate that issuers will have to offer with a new introduction.
Issues and Issuers
Figure 4 shows the dividend rates offered by June's five new issues. The five new June issues include four traditional preferred stocks and one exchange-traded debt security (ETDs). ETDs are very similar to (and are often mistaken for) preferred stocks but are actually individual bonds that trade on the stock exchange. As bonds, ETDs are often seen as lower risk than the same company's preferred stocks.
The new June issues have come from a surprisingly diverse group of companies. AFSI-A is from AmTrust Financial Services (AFSI) while ALL-A is from Allstate (ALL), both of which are insurance companies. BANCP is offered by First Pac Trust Bancorp (BANC), a bank holding company that operates primarily in the western United States.
SB-B is issued by Safe Bulkers, Inc. (SB). Safe Bulkers is a maritime shipping company specializing in the global transportation of dry goods. A relative newcomer to the preferred stock scene, SB-B is the company's only currently trading preferred stock. AIY, the only ETDs issued during June, comes from Apollo Investment Corp. (AINV), a New York based Business Development Company. AIY is the second ETDs recently issued by Apollo, the first being AIB last October at 6.625%.
Oddly, there were no new preferred stocks issued by Real Estate Investment Trusts (REITs) during June. Since the 2010 Wall Street Reform Act had the effect of converting bank-issued cumulative Trust Preferred Stocks (TRUPS) into non-cumulative traditional preferred stocks (increasing investor risk accordingly), REIT-issued preferreds have dominated the high quality preferred stock market. But after introducing new preferreds at a breakneck pace this year, REITs took a breather in June.
60 High Quality Preferreds Now Available Below $25
For over two years now, the stimulus policies of the Federal Reserve have pushed prices up and yields down. With prices relatively high, income investors have been subjected to increased risk (having to pay more for their shares, often above par) for lower returns. And for savers, taxes and inflation have left little, if anything, of the returns offered by investment grade corporate bonds (now at 4.25%) or bank CDs (1.1%) .
The preferred stock market has taken a step toward normal as prices returned to pre-stimulus levels during June and the long-term 7 percent average dividend rate re-emerged. At the close on June 27, there were 60 high quality preferred stocks available for a market price below these security's $25 par value (up from just nine such issues at the end of May ).
While the Fed has made it very clear that investors should not expect a policy change any time soon, June 2013 offered us a reminder of what a Fed-free preferred stock marketplace looks like -- higher dividend income available for lower market prices.
 Source for all preferred stock data in this article: CDx3 Notification Service database. Disclosure: The CDx3 Notification Service is my preferred stock email alert and research newsletter service and includes the database of all preferred stocks and exchange-traded debt securities traded on U.S. stock exchanges used for this article.
 Source for average June 2013 investment grade corporate bond yield: U.S. Federal Reserve (federalreserve.gov). Average bank CD yield is average APY for the top ten 24-month certificates offered by U.S. banks at the end of June 2013 (source: bankrate.com).
 Source for the nine sub-$25 high quality preferred stocks from May 29: CDx3 Research Notes, June 2013, page 3. Source for current 60 sub-$25 high quality preferred stocks: the "CDx3 Bargain Table" HotList, CDx3 Notification Service website (subscription required) on June 27, 2013.
More Preferred Stock Research
FROM DOUG K. LE DU
Click any headline
Preferred Stock Database and Search Engine Finds Bargains
Preferred Stock ListTM System Designed for Do-It-Yourself Investors
Earlier this year, our all new PreferredStockInvesting.com website introduced a new and very powerful subscription program for preferred stock investors.
Our Preferred Stock ListTM database and search engine, long enjoyed by subscribers to our comprehensive CDx3 Notification Service, is now available as a separate subscription for do-it-yourselfers. The database includes all preferred stocks and exchange-traded debt securities trading on U.S. exchanges while the Create Your Own Filter search engine feature allows you to define your own filters when looking for specific issues. You can even save your filters for later use.
Our database includes last trade price, today's trading volume, current yield, ex-dividend dates and much more, all of which can be sorted, downloaded and printed at any time. You can create and save your own watchlists of trading symbols, too.
And the Preferred Stock ListTM system, now available as a separate subscription, runs completely within your web browser which means there is no software to install onto your computer whatsoever (Windows or Mac).
The Create Your Own Filter search engine is extremely powerful. The sample seen here generates a list of Moody's investment grade, cumulative REIT preferreds and exchange-traded debt securities that are not yet callable, are trading on the NYSE and are currently priced below their $25 par value. The combinations are endless.
Our two subscription programs as described in detail at PreferredStockInvesting.com now include:
(1) our comprehensive CDx3 Notification Service - includes the Preferred Stock ListTM system, email alerts of new preferred stocks and exchange-traded debt securities (including alerts when new issues begin trading on the wholesale Over-The-Counter stock exchange), one-click Hotlists of the highest quality preferred stocks, monthly subscriber's newsletter, access to experts through our online discussion group and much more; and
(2) the Preferred Stock ListTM system itself - includes our Preferred Stock ListTM database and search engine. This new subscription program is great for do-it-yourselfers!
Group subscriptions are also available for great savings! Please consider subscribing to the comprehensive CDx3 Notification Service or to our Preferred Stock ListTM system, now available separately, today.
Test Your Knowledge With These Preferred Stock Facts!
There's a lot to like about preferred stocks. And many aspects of selecting, buying and selling the highest quality issues are misunderstood. Here are a few frequently asked questions that illustrate some of the more subtle points of preferred stock investing.
Clicking on any of the below questions will open a new window on your screen. Each question is presented with multiple-choice answers. Test your knowledge by submitting your best guess and I will automatically email you my analysis with the correct answer (and no spam, ever).
Preferred Stock Market Research Now Available All Month Long - Free
Automatic Email Delivery Of Preferred Stock Market Research Now Available
Readers do not have to wait until next month's issue of the CDx3 Newsletter to stay plugged into the market for high quality preferred stocks. Preferred stock research articles, marketplace observations and preferred stock news from the financial press and other information are posted to the Preferred Stock Investing Reader's Forum (my "blog") throughout the month.
To receive articles by email automatically without having to visit the Forum, click here
A separate window from FeedBurner (a Google service) will open on your screen. Enter and verify the email address that you want articles from the Forum to be emailed to as instructed. And don't worry - you'll never receive any spam from me and your email address will not be shared.
By receiving the articles as I post them via email, you do not have to visit the Forum in order to stay plugged into my research regarding the marketplace for the highest quality preferred stocks.
Please accept my invitation to receive articles by email and visit the Forum.
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includes a list of all of the CDx3
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Chapter 15 of Preferred Stock Investing includes a list of all of the CDx3 Preferred Stocks issued since January 2001 and the investing results you would have achieved had you invested in them using the CDx3 Income Engine.
Please take a look at www.PreferredStockInvesting.com.
And if you know someone who might be interested in simple investing for non-experts please have them sign up for this free monthly preferred stock research newsletter at www.PreferredStockInvesting.com. They will automatically begin receiving this monthly CDx3 Newsletter next month (plus a CDx3 Special Report) - all FREE.
Many Happy Returns,
Doug K. Le Du
Copyright (c) 2013 by Del Mar Research, LLC.
Preferred Stock List, CD Times 3, CDx3, CDx3 Income Engine, CDx3 Investor, CDx3 Portfolio, CDx3 Preferred Stock, CDx3 Perfect Market Index, CDx3 Bargain Table are trademarks of Del Mar Research, LLC. All rights reserved.
DISCLAIMER: The content of this CDx3 Newsletter is to be regarded as educational, rather than advisory. There can always be exceptions to trends and/or generalizations that may be discussed herein. Consider your financial resources, goals and risk tolerance before investing. You, and not Del Mar Research, LLC, are solely responsible for your own investment decisions.