Hello Together

[mid range]

(08-25-2021, 11:39 AM)ChadR Wrote:

(08-25-2021, 07:25 AM)fenders53 Wrote:

(08-24-2021, 02:44 PM)mid range Wrote: You might consider buying UNMA on a dip and holding a year. It is a UNM note currently at $27.02. You would have excellent downside protection. It is callable at $25 on 6/15/2023. As long as the common pays such a large dividend there is a possibility it won't be called in 2023. The risk with UNM common is that they, like anyone else, could lower their dividend.

UNM is at $26.54 with an annualized dividend of $1.20. UNMA is at $27.01 with an annualized dividend of $1.56.

$2 loss on share price in under 2 years?

I think this is more of a play on it not getting called in 2 years.  Though if it does, I doubt that the dividends would even cover the loss since you're less than 2 years away from possibly getting called.  Risk is too great from me.  I do like a good preferred stock, but I wouldn't touch this one without a lot more research.  Doesn't pass my initial smell test so I wouldn't be buying it.

The worst case scenario is a $1.10 gain in 2 years. Interest payments of $3.10 and capital gains a loss of $2.00. As I said, "if" I were to buy it now, I would hold it 1 year and decide whether to hold or sell depending on perceived chances of a call and interest rates next year. I have held UNMA for years and am good with 6.25% interest plus capital gains. There was no chance of the interest payments being reduced or eliminated on this note in contrast to a preferred stock or common stock paying a dividend. My recommendation is not a buy of UNMA now, but pointing out the positive side of buying UNMA today over UNM today. I understand UNM has more upside as well as more downside. Prices are nearly equal now. I consider UNM to be a company with slightly below average growth and still on a downward move.