This high yield preferred stock is issued by a mortgage REIT. The current annual yield is 10.59%, paid quarterly.
New Residential Investment Corp. (NRZ-PA)
From The Dividend Hunter
Last week, the high-yield sectors were hit with what I am calling a “liquidity event.” It affected every type of high yield stocks, including REITs, finance REITs, BDCs, MLPs, and preferred shares.
The cause of this event was the massive selling of stocks in these groups by leveraged closed-end funds (CEF’s) leveraged exchange-traded notes (ETNs). Over the course of a couple of days, asset management firm UBS Group AG (UBS) closed and liquidated a dozen two-times (2X) leveraged ETNs. I checked a handful of CEFs to verify my suspicions, and some funds basically disappeared last week.
Falling share prices pushed these funds to positions of gross over leverage. The massive dumping of shares to reduce leverage or to completely close out the funds sent high-high yield investment prices down even further.
One group that sold off is preferred stock shares. Preferreds have priority of dividend payments ahead of common stock dividends. That makes them a safer investment for income investors. The indiscriminate selling also hit preferreds, allowing us to buy these investments when they are down, and they are likely to recover faster than common stock shares.
This week’s buy of the week is New Residential Corp. Preferred A (NRZ.PFA). These are preferred shares issued by Dividend Hunter stock New Residential Corp. (NRZ). The NRZ.PFA shares were issued with a $25 par value and a fixed 7.5% dividend yield. On Friday, NRZ.PFA closed at $15 per share, giving a current yield of 12.5%. NRZ will declare the next preferred shares dividend in mid-April with payment in May.
Recommendation: Buy shares of NRZ.PFA up to $17.00 to lock in a nice minimum yield.
Note: you will see preferred share stock symbols listed in different ways. For example, Schwab has NRZ/PFA. You might also see NRZ.PA.
Tim Plaehn, The Dividend Hunter, yn345.isrefer.com/go/cabmdpc/cab/, March 24, 2020