Safe Bulkers: Another Look At This 9.6% Preferred Stock Yielder

Safe Bulkers Inc. (SB) has had a great run since my 8/10/2016 article recommended the high yielding SB-PD preferred stock issue. Despite recent gains, SB-PD still offers a hefty 9.6% yield and trades at about a 16% discount to par. Even if you missed the bottom of the historical slump in dry bulk shipping, there are still attractive yields and potential capital gains available as the recovery continues. This article provides ten updated reasons why SB-PD is still worthy of consideration by income investors.
What is SB-PD? SB-PD is a par $25 cumulative preferred issue with an 8% coupon. Dividends are paid quarterly and SB-PD now yields 9.6% at a recent price of $20.96. SB-PD is a perpetual issue, which means that the company is not required to call it. The company has the option to call SB-PD at par anytime after 6/30/2019. See prospectus for additional details. Average daily trading volume is typically around 20K shares. Use limit orders and patience when trading.
SB-PC is a very similar par $25 cumulative preferred issue. SB-PC is equal in seniority to SB-PD and both issues have an 8% coupon. The covenants are very similar. Note however, that SB-PD is a larger and somewhat more liquid issue.
SB-PB also has an 8% coupon and is equal in seniority to SB-PC / SB-PD. However, SB-PB trades above par because it has attractive "failure to redeem" covenants. These "failure to redeem" covenants make SB-PB act more like a short term debt maturity than a... Read more

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