Probably not. Though, like everything else, there's a reason to yield more than treasuries.
Not exactly a growth situation:
Sure, if their business completely collapses, the preferreds may blow.
There's nothing to indicate the business is near collapsing. The main water business is actually growing sorta slowly. The other segments are slow.
It's not a growth story. All the preferreds care about is whether the balance sheet is OK. It is, they produce about $150m more EBITDA than annual interest expense, preferred distribution cost and Cap Ex. That's the cushion, $150m. They don't need to grow, they just need that cushion to not turn negative.
It's the safest 12% yielding security I've ever known. It's not a treasury (4%), but for a financial instrument yielding 12% it's about as safe as it gets.
I was pumping it when it was $22, a few months ago, the story was the same. At $24 it's still nice, but you know, $22 was a better entry point. It collapsed from $24 to $20 in the April 2025 tariff thing, then recovered much more slowly than the market. The collapse from $24 to $20 was entirely macro driven tariff stuff, their Q2 2025 had some asset sales and also fundamental results that made their preferreds safer than they were in Q1 2025. Why it didn't jump right back to $24? They're very illiquid.
It should probably be $25.50 as it's not that easy to get 11.8% of $25 these day each year. |
