and...and...got some more NRF-C this morning, on the route (yield hit 9%...with yield-to-call a bit higher)...and also grabbed a tad more RSO-B...goes x later this month...Not fun to see the preferreds whilt, but I cost avg them....been thru it before - just gimmie the cash flows...let the stock prices do what they'll do, over time (I won't sell em')...But yeah, not a fun day, today...is what it is.
note: as rates rise over the next few years, these preferreds should drop/bleed, ON PRICE...and yields will rise....and I'll be putting the dividends back into more preferreds, over time, to compound them. Eventually, they can be called/expired by the companies, but in a rising rate environment, there's less chance they'd choose to expire them, which is fine with me...Yes, it's an odd APPROACH, not to be concerned about the PRICE of the stocks over time, and more focused on the NOMINAL CASH FLOWS....but for "oldies" not looking to sell them off, ignoring the price movements....and focusing solely on the cash flows,.... they give me what I want / need (and eventually, if they ever do get 'expired' at par...$25, well, the stock prices pop right back up ON THE EXPIRATION, if they're depressed)...YES...ODD...But it's what I'll need....Not for everyone.
got some more NRF-C today...in keeping with my "plowing" of the dividends back into more preferreds...They're not for everyone, but I like em'...One that goes x dividend this month is RSO-PB.
I've got quite a few that go x this month...so, should get some more dividends to "plow back", in mid-late July...I need the cash flows for my retirement....I keep them in my IRA for now...compounding.
The 10 yrs to 3% changes the relative risk-premium ratio of the two. Governement bonds are considered risk free, while indicidual stocks have a risk premium.
With NRF dividend at 9% and 10 year at 2%, risk premium= 7%
With 10 year at 3% and for the risk pemium to remain constant, NRF dividend needs to go up to 10% (stock price has to come down or NRF has to increase dividend)
This is a simplistic way of analysis and is the basis why the stock market is expected to go down if bonds yields go up.
I don't know of anyone these days who considers treasuries "risk free". Anyone who buys them knows that if rates go up, the bond price goes down. But much worse is the propensity of governments to devalue the currency, with the result that your 3% interest buys less each year.
I don't pay my bills with "risk premium". I pay with dollars. Whatever they're worth, 8.5% gives me more dollars than 3%.
We can call our preferred stock club THE GRASS GROWING WATCHERS...Basically that's the way it is...I forget about chasing stocks now, at my age...essentially passing up appreciation, for a set % return, in the preferreds. It all depends on what your goal is - mine is to have a portfolio that will generate good dividend cash flows within my IRA (and reinvest the dividends into even more preferreds, or if a preferred gets called). Not for people looking for their daily "high" or "fix"...But I do have my preferreds spread out a bit, on x dates, so I do see the grass actually grow, from time to time. Good luck.