From what I see, EKS, it looks it could become standard operating procedure: If a company's preferreds are callable and they get to par, and the yield is over 7.5%, I'll guess there's a good chance they will be called. Holding a preferred with such characteristics that trades OVER par, that would be very dangerous of course.
As for me, with the few individual preferreds I have, if I see that they're trading close to par, I'm selling. For me, it's not worth it holding for just the yield, even if it is 7.5-8.5%. The upside to such callable preferreds is limited when the stock's already so near par. And on the other side, we've seen in a market drop that these stocks have dived indiscriminately, and they could again.
Limited upside and unknown-but-possible downside. I don't like that. |
