3 Times Big Yield Meets Big Upside

Summary I own shares in each of these picks. One of these shares was severely overvalued for a long time, but it suddenly plunged. We loaded up this one just last week. The big discount to face value gives investors a higher yield and a significant amount of upside. Thinking higher Treasury rates will push preferred share prices down forever? History demolishes that idea. Looking for more investing ideas like this one? Get them exclusively at The REIT Forum. Learn More »

Get ready for charts, images, and tables because they are better than words. The ratings and outlooks we highlight here come after Scott Kennedy’s weekly updates in the REIT Forum. Your continued feedback is greatly appreciated, so please leave a comment with suggestions.

This weekend I want to help investors with an understanding how to pick between similar shares. However, first I know investors are going to want a handful of picks for shares that are currently looking pretty cheap.Preferred Shares

It had been a long time since we owned shares of NLY-G (NLY.PG). Specifically, we had dumped our prior position on 10/5/2020 at $21.19. We earned a respectable return (about 6%) on the brief investment (less than 4 months) in NLY-G. At the time, we felt there were several other preferred shares offering a more attractive risk/reward profile. However, today shares of NLY-G are quite attractive again. We bought shares between $19.71 and $19.75 on 6/28/2022. The increased appeal today is due to a few factors, including the higher short-term rates making the floating feature more attractive. We’ve also seen the ratio between the share price for NLY-G and the other preferred shares from AGNC and NLY take a dive.

In my view, it was surprising that NLY-G often traded at a price very similar to NLY-I (NLY.PI) and NLY-F (NLY.PF). If the shares were the same price, I would absolutely take NLY-I…