mREIT Preferreds - Great Taste And Less Filling
18.05.12
Some people might remember the SABMiller advertising campaign which featured George Steinbrenner, Billy Martin, Mickey Spillane and Bubba Smaith arguing over whether Miller Light tastes great or is less filling. On Seeking Alpha, the same sort of debate rages over equity REITs (eREITs) and mortgage REITs (mREITs) - where either type of REIT can fit either side of the debate. While many will debate which REIT type is the best investment, perhaps we can address an alternative - mREIT preferred stocks.
Many in the "eREIT camp" contend that mREIT dividends, and the business model generally, has too much risk (rising rates, flattening curve, leverage...) or too much volatility (dividend increases and decreases). Maybe they are right, maybe they are not - risk is defined by the investor. What I have noticed is some investors shying away from mREITs due to real or perceived risk. They want the yield, but the risk does not fit their risk/portfolio profile.
One way "around" this issue is to invest in mREIT preferred stocsk. The preferred stock of the mREITs does not have the yield of the common (as it is higher up in the capital structure and fixed) or the "volatility" of the common stock dividends. Perhaps we have found something that tastes great and is less filling - the compromise many investors have been looking for that might better address their risk needs as well as their return needs (all this without Billy Martin getting fired).
Source: Seeking Alpha
Business events scheduled for the coming week
18.05.12
MONDAY, April 30
WASHINGTON — Commerce Department releases personal income and spending for March, 8:30 a.m.
Belgian brewer Anheuser-Busch InBev reports quarterly financial results.
BRUSSELS — The eurozone releases inflation data for the 17 countries that use the euro.
MADRID — Spain releases first-quarter gross domestic product figures.
TUESDAY, May 1
WASHINGTON — Institute for Supply Management releases its manufacturing index for April, 10 a.m.; Commerce Department releases construction spending for March, 10 a.m.
CBS Corp. reports quarterly financial results.
Pfizer Inc. reports quarterly financial results.
DETROIT — Automakers release vehicle sales for April.
WEDNESDAY, May 2
WASHINGTON — Commerce Department releases factory orders for March, 10 a.m.
Comcast Corp. reports quarterly financial results.
CVS Caremark Corp. reports quarterly financial results.
Source: CBS News