Investment Grade Preferred Stocks Available Below $25

With the third quarter of 2014 now behind us, the number of investment grade preferred stocks selling for a market price below $25 is now at 71. While 71 candidates is much lower than the 167 we started the year with, it is still plenty for preferred stock buyers to pick from. At the end of 2013, preferred stock investors were certain that as the Fed tapered out of its QE bond-buying program, interest rates would go up. After all, when the Fed launched QE with the objective of lowering rates, the program worked so it seemed reasonable that backing out of QE would have the opposite effect.

In anticipation of higher rates, the average market price of preferred stock shares fell to $23.05 as 2013 came to a close, pushing up the number of investment grade candidates that were selling below their par value ($25 in most cases) to 167. HSEA is a trust preferred stock (TRUPS) introduced by Britain's largest bank, HSBC Holdings PLC (NYSE:HSBC), at 8.125 percent in April 2008 and has been callable since April 15, 2013. Note that HSEA offers Qualified Dividend Income (QDI) to individual investors (but not to corporate investors since HSBC is a foreign company). MHO-A is a traditional preferred stock introduced in March 2007 at 9.75 percent by M/I Homes, Inc. (NYSE:MHO). GDP-C is a traditional preferred stock offering cumulative dividends and was introduced in April 2013 by Goodrich Petroleum (NYSE:GDP) at 10.0 percent. TDE is an Exchange-Traded Debt Security (ETDs) introduced by Telephone and Data Systems (NYSE:TDS) in November of 2010, becoming callable on November 15, 2015.

Source: Seeking Alpha

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