Preferred Stock On 'Fire Sale,' 9% Yield And Upside From National General

Co-produced with PendragonY for High Dividend Opportunities.
Summary
Insurance companies have fairly predictable cash inflows. They also tend to be recession-resistant. National General (NGHC) is a nicely profitable insurance company that has done well. Even with close to $60 million in claims due to California wildfires and hurricanes, it has remained very profitable.
Concerns over these natural disasters have pushed down the prices of its preferred issues and its baby bond. With the Q4 report these concerns have been addressed, and so the preferred issues and baby bond are trading at a very attractive price that should soon return to more normal prices. In this article, we are recommending two preferred stocks and one "baby bond."
The two preferred stocks are:
National General Holdings Corp., 7.50% Dep Shares Non-Cumul Pfd Stock Series C (NGHCN) - Yield 8.8% National General Holdings Corp., 7.50% Dep Shares Non-Cumul Pfd Shares Series B (NGHCO) - Yield 8.8% Note: The yield shown above is the stripped yield after adding back accrued dividends of $0.33 per share.
The baby bond is:
National General Holdings Corp., 7.625% Subordinated Notes due 9/15/2055 (NGHCZ) - Yield 7.6% The company
Nation General is an insurance holding company offering both personal and commercial lines of insurance products both in the U.S. and internationally. Since we are recommending buying either the preferred shares or the baby bonds, we will look at the company’s ability to... Read more