Post-Call Utility Preferred Securities Offer 5%+ Current Yields

Seeking AlphaDividend IdeasPost-Call Utility Preferred Securities Offer 5%+ Current YieldsAug. 10, 2020 2:53 PM ET|| Includes: AEE, AILIH, AILIM, AILIN, AILIO, AILIP, AILLI, AILLL, AILLM, AILLN, AILLO, AILLP, AILNP, CNLHN, CNLHO, CNLHP, CNLPL, CNLPM, CNLTL, CNLTN, CNLTP, CNPWM, CNPWP, CNTHN, CNTHO, CNTHP, ES, IPLDP, LNTby: Non-Correlating Stock IdeasNon-Correlating Stock Ideas Long/short equity, Deep Value, research analyst, dividend investingSummaryRegulatory accounting of preferred securities means they are treated like equity for cost of capital calculations.  This increases value to the issuer.
Post-call securities are usually tethered to the call price.  This keeps current yield higher than comparable securities.
These preferred securities provide lower volatility and higher current yield in exchange for theoretical call risk and duration uncertainty.
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Introduction:
This is the third and final article in my recent trilogy written about the unknown or forgotten securities here on Seeking Alpha. The first was for a good yielding heating oil distribution company, and the second was about an underappreciated industrial stock. Neither security had been written up on this site in many years. In this article I'm going to turn to a group of preferred securities, some of which have never seen a missive so much as uttered in their direction. In fact, some of them don't even have their symbols in the system. Most readers probably won't know about issues like these except for members like Gridbird, who based off of commentary over the years has amassed quite a rare preferred security portfolio.
Source
The preferred security market is an interesting entity. In an age where the cost of running professional funds has exploded due to regulatory requirements and prime brokerage fees, the... Read more