8.5% Yield Worth A Look From RSO's C Series Preferred Share

Resource Capital Corporation (RSO) has a fairly substantial amount of credit risk with a portfolio of commercial real estate loans. RSO trades materially below book value. I believe there is some upside to RSO but the REIT comes with risks. The company has higher operating expenses than comparable mortgage REITs. The company is trading under 65% price to book value. The significant discount creates a decent safety cushion.
Preferred shares For investors following my preferred share ratings, here is my guide to preferred shares.
This article will be primarily covering RSO-C. The C preferred series offers a nice opportunity for investors who are willing to take on more risk for a stripped yield near 8.46%:

Source: CWMF’s subscriber spreadsheet (subscription required)
For the buy-and-hold investors, anything labeled as a 1 or 2 will generally be a reasonable choice. Depending on risk tolerance, the buy-and-hold investor may want to mix in a few shares rated at 3. I would generally treat the 4 and above as being more relevant to the investors who are happy trading securities on relative price movements and dividend captures.
RSO-C is well into the hold range:

Source: CWMF
RSO-B is $0.08 away from the sell range and carries some call risk. RSO-C is $2.42 away from the sell range. I am currently invested in RSO-C. Let’s review what’s been going on over the last few weeks.
December 16, 2017 This was sent to subscribers on... Read more

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