Great Resources for Preferred Stock Investors!






Issue 142


Subscribe: CDx3 Notification Service

  See Preferred Stock Investor Reviews


Preferred Stock Investing, 5th Edition

  See Reader Reviews


Free Preferred Stock Resources


In This Issue:

High Quality Preferred Stocks

Preferred Stock News

Special Announcement

More Preferred Stock Research

Free Special Offer




"Your service is one of a kind. It specializes in quality preferred stocks. Thank you Doug.”

- from Leonard W., CDx3 Notification Service subscriber. See more preferred stock investor reviews here.














by Doug K. Le Du


Preferred stock researcher

SeekingAlpha contributor

PortfolioChannel contributor

Syndicated writer






100 Reader Reviews


See Reader Reviews

Table of Contents

Free Excerpt


















































Already a subscriber?

See page 1 of this month's issue of the subscriber's newsletter, CDx3 Research Notes, for symbols.








Top 10 Investment Grade, Cumulative Preferreds Available Under $25



December 2018 delivered the best buyer's market for preferred stocks in five years. Prices finally fell below par, even for the highest quality issues, pushing yields up.


The average dividend rate being paid by U.S.-traded preferred stocks jumped to 7.36 percent during December, a 0.2 point boost to the dividend income of today's preferred stock buyers in just one month.


There are currently 127 high quality preferred stocks selling for an average price of $23.11 per share (investment grade, cumulative dividends). 99 of these high quality issues are now selling below their $25 par value, offering an average current yield of 6.1 percent.

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, have cumulative dividends (meaning that if the issuing company skips a dividend payment to you, they still owe you the money) and offer investment grade ratings from Moody's Investors Service.


Currently priced below par

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 the highest quality preferred stocks available for less than $25. Of the twenty-five preferred stock characteristics 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 offer cumulative dividends and are currently trading below their $25 par value, this filter also limits the list to issues that have not suspended their dividend payments. 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 List
TM database, with ETDs shown in green font (please note that to protect the values of subscriptions to our CDx3 Notification Service, trading symbols are obscured here). Already a CDx3 Notification Service subscriber? See page 1 of this month's issue of the subscriber's newsletter, CDx3 Research Notes, for symbols.



There were a total of 894 preferred stocks and ETDs trading on U.S. stock exchanges as the month came to a close (including convertible preferred stocks). Of these 894, these are the top ten highest quality issues that are trading below their $25 par value. This list is sorted by dividend rate (coupon) with the highest payers listed first.


All of these high quality securities 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.

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 securities listed in Figure 2 are offering some of the best choices available to you as an income investor.

Please consider becoming a subscriber to our CDx3 Notification Service today. We offer monthly and annual subscriptions for individuals and groups. Check out these features:

















Preferred stock buyers benefit from global equity scare


The big bump in preferred stock dividend yields during December prevented new preferred stocks from being introduced. With rates spiking up, underwriters are unable to accurately set the coupon rate for new issues. For the first time since August 2013, we went a month without any new preferreds to consider.

Econ 101 teaches us that leaving cash with employers stimulates employment which, in turn, generates more tax revenue. Last year's tax break has demonstrated this simple mechanism again. The December 13 Monthly Treasury Report reported that for the first two months of fiscal 2019 (Oct/Nov) the U.S. Treasury collected record tax revenue exceeding $458 billion, the largest haul coming from corporate income and payroll taxes. For the same two month period, corporate income tax collections jumped from $1.5 billion last year to $6.3 billion this year.

Conversely, French president Emmanuel Macron won 2017's election on the promise of fixing a sluggish economy with ten percent unemployment. Attempting to do so with a series of tax increases, culminating with a massive transportation tax hike, the French economy went from bad to worse forcing the French middle class into the streets in violent protest. How making it more costly to move products and consumers to market would stimulate economic growth remains unexplained.

But according to Bloomberg News, the French economic meltdown was just one of three primary events that caused investors to sell equity positions worldwide during December - Brexit uncertainty and a significant slowdown in China joined the French turmoil to form the perfect storm. The result being that investors moved cash out of stocks globally and into U.S. treasuries.

Since cash was flowing into U.S. treasuries, prices went up for those securities, dropping their yields.

December's global equity selloff included U.S. preferred stocks, pushing average prices down by $0.67 throughout the month. That price drop pushed up preferred stock yields substantially (now at 7.36%), delivering a spectacular end-of-year bonus to today's preferred stock buyers.

The two charts above illustrate the resulting rare market condition where preferred stock yields are rising while treasury yields are falling. While preferred stocks are providing increasing yields to their buyers, treasury investors find themselves settling for sub-3% returns.

99 high quality preferred stocks now below $25

One of the many preferred stock market metrics I collect and publish every day is the number of preferred stock “bargains” available to preferred stock investors.


These bargains are the highest quality preferred stocks selling for a market price that is below these security’s $25 par value. By high quality I mean those preferred stocks with the characteristics that most risk averse investors favor – investment grade ratings, cumulative dividends and the like.

In the event of a future call, the issuing company of a preferred stock is required to pay shareholders the security’s par value ($25 per share) in cash, so buying preferred stock shares below their $25 par value positions you for a future capital gain (on top of the regular dividend income you receive in the meantime).

The next chart illustrates the number of high-quality preferred stocks selling below their $25 par value each day throughout 2018. Beginning the year at 37 issues and reaching a peak of 107 on December 27, there were 99 high quality preferred stocks selling for a price below their $25 par value as December came to an end.

These 99 high quality issues are offering an average current yield of 6.1 percent for the consideration of preferred stock investors. Preferred stock buyers have not had a buying opportunity like this since December 2013.

As nice as it is, this is a condition that is very unlikely to last. History has shown us over and over that once the initial panic subsides, investors tend to move their cash out of treasuries and back into higher-paying alternatives, starting with those offering relatively low risk, namely corporate bonds and high-quality preferred stocks.

Preferred stock buyers are looking at a very exciting start to the new year.










See Reader Reviews

Table of Contents

Free Excerpt









Preferred Stock Investing, Fifth Edition

Learn how to screen, buy and sell the highest quality preferred stocks


Preferred Stock Investing is one of the highest reader-rated books in the United States with 100 reviews posted at Amazon.

The Fifth Edition addresses selecting, buying and selling the highest quality preferred stocks during the market conditions that we are currently facing.

See: Reviews | Table of Contents | Free Excerpt | Paperback | eBook

The Fifth Edition has 21 chapters organized into six Parts over 334 pages. Here are some highlights:

- Part I, "The Preferred Stock Market," introduces a new suite of charts and metrics specifically designed to measure and track the preferred stock marketplace.

- Part III, "Buying the Highest Quality Preferred Stocks," includes several new chapters such as "Buying 'Fed-Free' Preferred Stocks," "Keeping Up with Increasing Interest Rates" and "Buying Less-Than-Perfect Preferred Stocks."

- And chapter 8, "Managing the Risks," has been completely rewritten and expanded to include risks that are unique to preferred stocks during the increasing rate environment that awaits us.

You can pick up a copy of the new Fifth Edition of Preferred Stock Investing at your favorite online retailer such as Amazon (paperback) or directly from BookLocker, the book's publisher (BookLocker provides paperback and PDF eBook formats).













Recent Preferred Stock Articles by Doug K. Le Du


Here is a list of some of my recent syndicated articles. To view an article, just click on the headline.

























Preferred Stock Market Research Now Available All Month Long - Free


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.










Book (Preferred Stock Investing)

  - Paperback provided by Amazon

  - eBook PDF provided by BookLocker


Notification Service

  - eMail alert features

  - Spec Sheets

  - Database features

  - Preferred stock search engine features

  - Access to experts

  - CDx3 Research Notes newsletter features

  - Pricing, Individual or Group subscriptions


Free Resources

  - CDx3 Newsletter (published by email the first week of every month)

  - Research article library (hosted by Seeking Alpha)

  - Test your knowledge (online preferred stock quiz)





(c) 2019 Del Mar Research, LLC. All rights reserved.


Trademarks of Del Mar Research, LLC:

  - CDx3 logo

  - Preferred Stock List, CDx3, CD Times 3, CDx3 Income Engine,

     CDx3 Investor, CDx3 Portfolio, CDx3 Preferred Stock


Notification Service

  - Individual Subscription Agreement

  - Group Subscription Agreement



The content of this newsletter, and the materials that it links to that are owned by Del Mar Research, LLC, are to be regarded as educational, rather than advisory. There can always be exceptions to trends and/or generalizations that may be presented herein. Consider your financial resources and goals before investing. You, and not Del Mar Research, LLC, are solely responsible for your own investing decisions.