AHH, ARCC, CAG, CGBD, CNQ, CPB, CTO, DOW, EMP, GMRE, HRZN, HTIA, KMI, LXP, MEGI, NTST, SWZ, WHF, WU

Economy: 

The ten year treasury yield is continuing its uptrend this morning. 

U.S. 10 Year Treasury Note-MarketWatch: 4.637%, up .048% as of 9:15 CST. The continued rise in intermediate term interest rates is pressuring bond like stock sectors down.  

Personal Consumption Expenditure (PCE) inflation November 2024-CNBC The month-to-month increases in both PCE inflation and core inflation were .1%, lower than .2% expected for both. 

Personal Income and Outlays, November 2024 | U.S. Bureau of Economic Analysis (BEA)

Annual PCE Inflation: 2.4%, up from 2.3%

Annual Core PCE Inflation:  2.8%, unchanged in October

Real Disposable Income: +.2%, down from +.5% in October

A Faster Convergence of Shelter Prices and Market Rent: Implications for Inflation - Federal Reserve Bank of Boston The owners equivalent component of both PCE inflation and CPI will be coming down in the months ahead. 

The government released its third estimate of 3rd quarter real GDP growth last week. Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, Third Quarter 2024 | U.S. Bureau of Economic Analysis (BEA)

Third quarter real GDP growth was reported at a 3.1% annual increase, up from 2.8% in the second estimate. PCE inflation for the third quarter increased 1.5%. Personal consumption expenditures were reported at +3.7%:

November existing home sales surged more than expected Up 4.8% compared to October and up 6.1% compared to November 2023. The rise in mortgage rates may dent sales in the coming months. 

In recent comments, Trump talks history of U.S. tariffs. Here's a fact check. - CBS News

My video: My Assessment of the U S Economy Going into 2025 - YouTube

+++

Allocation Shifts Discussed in this post: 

Treasury Bills Purchased at Auction: $8,000 in principal amount

(I am buying 2 of the 4 month treasury bill that will be auctioned today that is not included in this total)

Corporate Bonds: $10,000 in principal amount

Treasury Notes Purchased at Auction: $3,000 in principal amount

(I am buying 1 of the 7 year note that will be auctioned later today which is not included in this total)

Treasury Note Purchased in Secondary Market: $1,000 in principal amount

Inflow U.S. Common Stocks: +$664.68

(consisting of $1,353.29 in purchases minus $688.61 in proceeds)

Realized Gain Common Stocks: +$260.66

Inflow Stock Funds (CEFs): +$347.1

Inflow Stocks/Stock Funds: +$1,011.78

Exchange Traded Baby Bond (EMP): +$107.75

Net Outflow Equity REIT Preferred Stock: -$62.49

(consisting of $205.74 in proceeds minus $143.25 in a purchase)

2024 Net Outflow Stocks/Stock Funds: -$68,480.98  

December 2024 Treasury Yield Curve: 

December 2024 Real Yield Curve Rates: 

5 year TIP breakeven inflation rate: 2.39% (the average annual CPI over the next five years for the buyer of the TIP with a 2.04% real yield to breakeven with the buyer of the 5 year non-inflation protected treasury with a 4.43% yield)

10 year TIP breakeven inflation rate: 2.35%

++

Portfolio Issues: 

If I receive an annual income of 4% or more from assets held in brokerage accounts, I will not have to invade the principal amount to pays expenses. 

I consequently manage my portfolio to minimize risk and to generate income.

Less than 10% of the total portfolio is invested in stocks. Most of those stocks have dividend yields over 4% and many over 10% based on my cost basis.  

My largest allocation is in treasury bills and investment grade corporate bonds maturing within 2 years. The next largest allocation is in Tennessee municipal bonds with a weighted average credit rating of AA+.  

5 Year TIP Auction: 

As previously discussed in a comment published on 12/19/24, I bought 2 of the 4 year, 10 month TIP at auction last Thursday, both in Roth IRA accounts: 

Auction Results:

Real Yield = 2.121%

The real yield is the annual yield above the inflation rate until the note matures. How Do I Calculate the Yield of an Inflation Adjusted Bond?; TIPS Spread: What it is, How it Works, Relevance

Matures on 10/15/29

When I placed the first of my two orders on 12/17, as noted in a comment published that day, the real yield was at 1.882% and then increased about 24 basis points or 12.75% based on the auction results 2 days later. 

****

Vanguard Capital Opportunity Fund - Investor Class (VHCOX)

I previously discussed paring my position in VHCOX.   

Item # 1.A. Sold 5 VHCOX at $91.32 (12/5/24); Item # 1.B. Sold 2 VHCOX at $90.66 (11/14/24 Post)(Profit Snapshots: $355.73)

Subsequent to those light pares, the fund declared a $6.1258 distribution that went ex dividend on 12/18: 

I received $404.81 on my remaining 60+ share position that has an average cost per share of $40.31:

I have been taking the dividends in cash for several years, viewing that option as an alternative to selling more shares. VHCOX Stock Dividend History & Date 

****

Adams Diversified Equity Fund Inc. (ADX) - Stock CEF

Sponsor's website: Adams Funds

ADX  - CEF Connect

ADX SEC Filings

SEC Filed Shareholder Report (Q/E 9/30/24)(cost of assets at $1.414+B with the value then at $2.742+B)

Adams Diversified Equity Fund (ADX) Portfolio | Morningstar (currently rated 4 stars)

I started to trade this stock CEF in 1984 and have been in and out of it many times since then. 

Currently I own just 48+ shares with an average cost per share of $15.85. 

Price as of close on 12/24/24

I am taking all dividends in cash, which I view as an alternative to selling shares. 

ADX paid a year end distribution of $1.96 per share, mostly sourced from long term capital gains ($1.62): 

$94.99

Adams Diversified Equity Fund Declares Year-End Distribution 

Starting last May, the fund adopted a managed distribution policy where it will pay a dividend each quarter equal to 2% of net asset value per share "with the fourth quarter distribution expected to be the greater of 2% of average NAV or the amount needed to satisfy minimum distribution requirements of the Internal Revenue Code for regulated investment companies. Average NAV will be based on the average of the previous four quarter-end NAVs per share prior to each declaration date." Adams Diversified Equity Fund Announces Initiatives to Enhance Shareholder Value 

Last August, the fund bought back 12,405,174 shares at $22.47 or 98% of the then net asset value per share. Adams Diversified Equity Fund Announces Final Tender Offer Results 

My last buy discussion:  Item # 3.B. Bought 5 at $16 (11/4/23 Post)(notes realized gains of $3,239.71 starting in 2008)

Largest gain: Eliminated ADX  - Sold 467+ Shares Update On Closed End Fund Basket Strategy As Of 7/28/15 - South Gent | Seeking Alpha (profit snapshot = $1,923.24). 

As previously discussed, this CEF was formed just prior to the 1929 crash and was one of the few CEFs that survived that crash and the Great Depression.  

A significant part of the total return has historically been sourced from dividends, primarily the year end distribution that includes the long term capital gains realized during each year. 

As a small part of my risk mitigation now, I no longer will own 400-500 shares of ADX but 50 or so, and will further reduce the risk  by taking the distributions in cash. 

++++++

Matt Gaetz ethics report    

Excerpt from Report

Trump, who was purportedly Chosen by God to rule in America, wanted to appoint Gaetz as the Attorney General which seems hard to reconcile with Trump's status as the Messiah unless I am confused about what are and are not Christian values. Trump had to know what was in this report before it was released. 

+++

1. Small Ball Buys: 

I have been adding to equity REIT positions whose shares have declined in response to higher intermediate term interest rates. Their dividends and generally slow dividend growth make the shares less attractive compared to just owning a 10 year treasury note. 

The stock nibbles discussed below are in depressed sectors and are average downs. The decline in share prices have made the dividend yields slightly more attractive to me.  

A. Added to HRZN - Bought 10 at $8.65 - Schwab Account: 

Quote: Horizon Technology Finance Corp. (HRZN) - Externally Managed BDC

Cost: $86.5  

HRZN SEC Filings 

10-Q for the Q/E 9/30/24 A summary of investments starts at page 7. The non-accrual loans are indicated by (13) or (14) next to the name. 

SEC Filed 2023 Annual Report (Risk factor summary starts at page 26 and ends at page 63) 

Last Discussed: Item # 2.F. Added to HRZN in Schwab Account - Bought 5 at $9.23 (11/7/24 Post) 

HRZN is an out-of-favor and deservedly hated BDC that has recently experienced an unacceptable increase in non-performing loans. 

New Average cost per share: $10.17 (50 shares)

Snapshot Intraday on 12/17/24 after add

Dividend: Monthly at $.11 per share ($1.32 annually)

HRZN Stock Dividend History & Date

Yield at New AC per share: 12.98%

Last Ex Dividend: 12/16/26

Next Ex Dividend: 1/16/25 

HRZN Stock Dividend History & Date

Net Asset Value per share history: Bad

I view this history as a negative and would classify this BDC as deservedly hated. I have limited my dollar exposure in response and have attempted to produce some trading gains which I have done so far - just barely.  

The 21% decline from 12/31/22 to 9/30/24 is particularly troubling as was the decline in 2016. The economy has been in an expansion mode in 2023 and 2024. 

9/30/24:  $9.06

6/30/24:  $9.12 10-Q at page 3 

12/31/23: $9.71 "As of December 31, 2023, there were four debt investments with an internal credit rating of 1, with an aggregate cost of $72.5 million and an aggregate fair value of $27.6 million. As of September 30, 2023, there were two debt investments with an internal credit rating of 1, with an aggregate cost of $41.5 million and an aggregate fair value of $15.5 million. As of December 31, 2022, there were three debt investments with an internal credit rating of 1, with a cost of $20.9 million and a fair value of $8.3 million." SEC Filed Earnings Press Release for the Q/E 12/31/23  

12/31/22:   $11.47

 6/30/22:   $11.69

 3/31/22:    $11.68

12/31/21:    $11.56

12/31/20:   $11.02

 3/31/20:    $11.48 
12/31/19:    $11.83
12/31/18:    $11.64
12/31/17:    $11.72
12/31/16:    $12.09
12/31/15:    $13.85
12/31/14:    $14.36 10-K at page 54 
12/31/13:    $14.14
12/31/12:    $15.15
12/31/11:    $17.01

October 2010: IPO at $16, net of $14.88 to HRZN after underwriting discount: Prospectus 

I do not research why or how those declines happened, which I may or may not recall, since what it important is that they did in fact happen 

Last Earnings Report (9/30/24): I discussed this report in a recent post and have nothing further to add. Item # 3.E. Bought 5 HRZN in Schwab Account at $10.11 (10/31/24 Post); SEC Filed Earnings Press Release I noted in that post that HRZN realized $33.894M in losses during the quarter, or $.93 per share, which is one way to get nonperforming loans of the books. 

When a BDC sells loans at a loss, the impact on net asset value per share will vary depending on much the loans were marked down in prior quarters. HRZN reported a $.36 realized loss in the 2023 third quarter. 

Undistributed spillover income was approximately $1.27 per share as of 9/30/24.    

Sell Discussions: Item # 2.I. Eliminated Duplicate Position in HRZN - Sold 10 at 10.01 (10/31/24 Post)(profit snapshot = $8.14); Item # 2.A. Eliminated HRZN in my Vanguard Account - Sold 20 at $12.05 (11/25/23 Post)(profit snapshot = $5); Item # 6.C. Pared HRZN - Sold 5 at $13.32 (11/15/22 Post)(profit snapshot =$7.4);Item # 1.B. Eliminated HRZN - Sold 30 at $11.8 (11/18/18 Post)(profit snapshot = $53.09)

B. Added to GMRE - Bought 5 at $8.43+; 5 at $8.06; 10 at $7.77 - Schwab Account: 

Quote: Global Medical REIT Inc. (GMRE)

Cost: $160.17 

GMRE through its operating subsidiary owned 187 buildings as of 9/30/24. Most of the properties are medical office buildings or inpatient rehabilitation facilities. 

"As of September 30, 2024, the Company’s portfolio was 96.1% occupied and comprised of 4.8 million leasable square feet with an annualized base rent of $107.8 million. As of September 30, 2024, the weighted average lease term for the Company’s portfolio was 5.6 years with weighted average annual rent escalations of 2.2%, and the Company’s portfolio rent coverage ratio was 4.6 times."

One Tenant Bankruptcy: "On May 6, 2024, Steward announced that it filed for Chapter 11 bankruptcy reorganization. At the time of the bankruptcy filing, Steward represented 2.8% of the Company’s annualized base rent, primarily related to the Beaumont Facility. As of September 15, 2024, Steward formally rejected its lease at the Beaumont Facility. This formal lease rejection, which was approved by the bankruptcy court, allowed for a new, 15-year, triple-net lease with an affiliate of CHRISTUS at this facility to become effective. We expect rent to commence on this lease in March or April 2025." 

SEC Filings

10-Q for the Q/E 9/30/24 

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Management: Internal

Website: Global Medical REIT  

Last Buy Discussion: Item # 4.B. Added to GMRE in Schwab Taxable Account - Bought 5 at $8.64; 5 at $7.93; 5 at $7.55; 5 at $7.3 (11/11/2022 Post)

New Average cost per share: $8.14 (52+ shares)

Snapshot Intraday on 12/24/24 after last add

Dividend: Quarterly at $.21 per share, last raised from $.205 effective for the 2022 first quarter payment. 

GMRE Dividend History | Seeking Alpha

I do not anticipate a dividend hike. 

Yield at $8.14: 10.32%

Last Ex Dividend: 12/20/24 (owned 42+ as of)

Last Earnings Report (Q/E 9/30/24): SEC Filed Press Release and SEC Filed Supplemental  

Revenues: $34.264M

FFO per share: $.19

AFFO per share: $.22

GAAP to AFFO Reconciliation: 

In triple net leases, the tenant will pay for property insurance, property taxes and maintenance costs. 58% of GMRE's revenues originate from triple net leases: 

Absolute net leases require the tenant to pay the same expenses as in a triple net lease but adds a responsibility to pay for major structural costs (e.g. new roof). 

Absolute Net, Triple Net, Double Net, & Net Leases | NNN Leasing

Modified Gross Lease - Overview, Elements, Risks, Uses

Debt and hedging information can be found at page 13 of the Supplemental. 

Sell Discussions: Item # 3.E. Eliminated Duplicate Position in GMRE in Fidelity Account - Sold 15 at $9.32 (8/19/23 Post)(profit snapshot = $31.42); Item # 2.G. Eliminated GMRE in Vanguard Taxable Account - Sold 20 Shares at $11.07 (1/20/23 Post)(profit snapshot = $33.97); Item # 2.E. Pared GMRE in Schwab Account - Sold 15 GMRE at $10.46+ (1/30/23 Post)(profit snapshot = $3.39); Item # 1.B. Eliminated GMRE - Sold 40 at $11.25 (6/6/20 Post)(profit snapshot = $87.86); Item # 4.A. Eliminated GMRE-Sold 98+ at $9.41 (11/28/18 Post)(profit snapshot = $159.1); Item # 1.B. Sold 10 GMRE at $11.22 (4/18/20 Post)(profit snapshot = $12.07); Item # 3.C. Sold 50 GMRE at $10.01 (5/23/2017 Post)(profit snapshot = $82.54); South Gent's Comment Blog # 7: Eliminated GMRE (12/17/2016)(discussing realized gains from several trades)

GMRE Realized Gains to Date: $507.2 

Goal: Any profit in excess of the dividend payments. 

Equity Preferred Stock: I also own 30 GMRE-PA shares. The tax cost basis is at $21.88. 

Prospectus

Coupon: 7.5% paid on a $25 par value

GMREPRA Buy Discussions: Item # 5.I. Added to GMREPRA - Bought 5 at $23.06 (10/25/22 Post); Item # 4.C. Bought 10 at $24.66 (10/11/22 Post); Item # 2.A. Bought 10 GMREPRA at $21; 5 at $16.88 (4/18/20 Post); Item # 2.A. Bought 10 GMREPRA at $21; 5 at $16.88 (4/18/20 Post)

GMREPRA Sell Discussions: Item # 1.B. Sold 70 GMREPRA at $25.87 (4/24/19 Post)(profit snapshot = $208.36); Item # 1.A. Sold 30 GMREPRA at $24.84 (2/20/19 Post)(profit snapshot = 9.79)

C. Added to MEGI - Bought 15 at $12.5; 10 at $12.18 - Fidelity Account: 

Quote: MainStay CBRE Global Infrastructure Megatrends Term Fund Overview - Primarily a stock CEF with some bonds, preferred stocks and convertible securities. 

Cost: $309.3

Investment Category: Monthly Income Generation with CEFs. 

Leveraged: Yes at 23.49% as of 9/30/24  

The fund uses a line of credit: 

Annual Report F/Y Ending 5/31/24 at p.21

Borrowing costs have been trending down since the FED started to cut the FF rate in September. Borrowings are priced at a spread to the Overnight Bank Funding Rate. Overnight Bank Funding Rate (OBFR)- St. Louis Fed As noted in that chart, the OBFR has declined by about 1% since 5/31/24. 

MEGI SEC Filings

MainStay CBRE Global Infrastructure Megatrends Term Fund - SEC Filed Annual Report for the F/Y ending 5/31/24 

SEC Filing- Holdings as of 8/31/24 

Sponsor's website: MEGI MainStay CBRE Global Infrastructure Megatrends Fund 

Last Buy Discussions: Item # 2.B. Added to MEGI - Bought 5 at $11.45 (4/19/24 Post); Item # 1.A. Added to MEGI - Bought 50 at $12.32 - Fidelity Account (4/12/24 Post) 

New average cost per share this account: $12.27  (110 shares)

Snapshot Intraday on 12/20/24 after second add

Dividend: Monthly at $.125 ($1.5 annually)

There has been some ROC support for the dividend. To completely cover the dividend with income, the fund will have to harvest capital gains. 

For the F/Y ending 5/31/24, $.38 of the total dividend was ROC sourced. (Annual Report at p. 15)

I have turned off dividend reinvestment and have profitably sold all shares purchased with dividends as noted below. 

Yield at $12.27: 12.22%

Last Ex Dividend: 12/23/24 (owned all as of)

Data as of 12/20/24: 

Closing Net Asset Value per share: $14.17

Closing Market Price: $12.21

Discount: -13.83%

Sourced: MEGI  - CEF Connect 

MEGI Portfolio | Morningstar (lists top 25 holdings)

Of the top 10 holdings, I currently own only Enbridge (ENB). 

Last Sell Discussions: Item # 2.A. Sold Remaining MEGI Shares Purchased with Dividends at $14.44 (9/19/24 Post)(profit snapshot = $3.71); Item # 3.A. Pared MEGI - Sold 22+ at $13.41 (5/24/24 Post)(profit snapshot = $10.31)(sold my highest cost lots plus shares purchased with dividends) 

As previously discussed, I will own a sufficient number of CEFs in my Fidelity account that will generate between $200 to $300 in monthly income.   

D. Added to NTST - Bought 10 at $14.25: 

Quote: NetSTREIT Corp. (NTST) - Internally Managed Retail REIT

Cost: $142.5

Website: NETSTREIT

10-Q for the Q/E 9/30/24

NTST SEC Filings

2023 SEC Filed Annual Report

New Average cost per share: $15.46 (50 shares)

Dividend: Quarterly at $.21 per share

Yield at New AC: 5.43%

Last Ex Dividend: 12/2/24

Last Earnings Report (Q/E 9/30/24): I discussed this report in a recent post and have nothing further to add here. Item # 2.A. Started NTST - Bought 10 at $16.43; 10 at $16 (12/5/24 Post)

Purchase Restriction: 10 share lots with each subsequent purchase required to be at the lowest price in the chain with a maximum at 100 shares. 

Purchase restrictions are developed through my risk assessment process taking into consideration my investment goals that emphasize income generation and preservation of capital. 

For this REIT, the risk is viewed as somewhat elevated due to the exposure to Walgreens and Advance Auto Parts who are reducing their number of stores. I do not know how many stores will be closed that are leased by this REIT.

Another risk assessment factor for REITs is that their stock prices will be pressured down when intermediate term interest rates are rising, which has been occurring starting in September. 

The REIT dividend yield as a bond substitute becomes less attractive as the 10 year treasury yield has increased almost 100 basis points. 2024 Treasury Yield Curve-U.S. Department of the Treasury (3.63% as of 9/16/24)

The question for investors is whether you would prefer owning this REIT stock or a ten year treasury yielding 4.62%. 

E. Added to WU - Bought 5 at at $10.79; 5 at $10.5: 

Quote: Western Union Co. (WU)

Cost: $106.43

Investment Category: Bond Substitute 

WU SEC Filings

WU Analyst Estimates | MarketWatch

WU Key Metrics Page at Reuters

10-Q for the Q/E 9/30/24 

New average cost per share: $11.63 (75+ shares)

Dividend: Quarterly at $.235 per share ($.94 annually)

I am reinvesting the dividend.  

Yield at New AC: 8.08%

Last Ex Dividend: 12/23/24 (owned 70+ as of)

Last Earnings Report (Q/E 9/30/24 Post) I discussed this report here: Item # 3.C. Bought 5 WU at $11.26; 3 at $10.86 (10/31/24 Post); SEC Filed Press Release and  10-Q.

Share Buyback Authorization: Subsequent to my last discussion, WU announced that it may buy back up to $1B  in shares. Western Union Announces New $1 Billion Share Repurchase Program 

There was a previous authorization, dating back to February 2022, to buy up to $1B in common stocks. Under that authorization, the company bought back $822.7M in shares, see 10-Q page 42 wherein it is noted that $177.4M of the $1B 2022 authorization remained as of 9/30/24. 

As with any buyback announcement, there is no obligation for WU to buy any shares. Buying back $1B near the current price would be a positive for shareholders IMO and would reduce the dividend payout amount. 

Maximum Position: 100 shares. 

F. Added to CPB - Bought 3 at $41.82; 2 at $41.38: 

Quote: Campbell's Co. (CPB) 

Cost: $208.21

This is part of a cautious average down process where I buy 2 then 3 shares or 3 then 2 shares until I hit 20 shares. Each purchase is required to be at the lowest price in the chain.  

CPB Analyst Estimates | MarketWatch

CPB SEC Filings

CPB SEC Filed Annual Report for the F/Y ending on 7/28/24

New Average Cost per share: $41.95 (7 shares)

Dividend: Quarterly at $.39 per share ($1.56 annually)

CPB Dividend History | Nasdaq

Yield at New AC: 3.72%

Next Ex Dividend: 1/2/25

Last Earnings Report (F/Q ending 10/27/24): I discussed this report and recent developments in a recent post and have nothing further to add here. Item #1.B Restarted CPB - Bought 2 at $42.71 (12/12/24 Post); SEC Filed Press Release

G. Added to AHH - Bought 2 at $10.94; 5 at $10.55; 10 at $10.15: 

Quote: Armada Hoffler Properties Inc. (AHH)  

Internally Managed REIT

Cost: $176.13

AHH owns office, retail and apartment properties, provides financing for third party property developers, and has a significant general contracting business.   

Stabilized Portfolio: 

Top 25 Tenants by ABR (annual base rent): 

Portfolio Expansion: 

Real Estate Financing: 

General Contracting:

Preceding Snapshots Sourced from SEC Filed Supplemental for the Q/E 9/30/24 

AHH SEC Filings

AHH 2023 SEC Filed Annual Report

Last Discussed:  Item # 3.D. Bought 10 AHH at $10.47 (3/28/24 Post) 

New average cost per share: $10.58 (55 shares)

Snapshot Intraday 12/23 after last add

The preceding snapshot includes a 15 share position in the equity preferred stock AHH.PRA. 

Dividend: Quarterly at $.205 per share ($.82 annually), last raised from $.195 per share effective for the 2024 first quarter payment. The dividend was reduced from $.22 to $.11 effective for the 2020 third quarter payment in response to the pandemic and recession. Since that slash, the dividend has been raised in increments. 

I have changed my dividend option to reinvestment. 

AHH Stock Dividend History & Date

Yield at New AC: 7.75%

Last Ex Dividend: 12/26/24 (owned all as of) 

Last Earnings Report (Q/E 9/30/24): 

SEC Filed Press Release and SEC Filed Supplemental

Revenues: $187.652M

FFO per share: $.14

Normalized FFO per share: $.35 

AFFO per share: $.28 (equivalent to funds available for distribution)

In calculating normalized FFO, the primary add back to FFO is $16.669M decrease in the value of derivatives that are not designated as cash flow hedges. 

Reconciliation Net Income to AFFO: 

2024 Guidance for Normalized FFO per share: $1.25-$1.27.

H. Added to CNQ - Bought 5 at $29.45: 

Quote: Canadian Natural Resources Ltd.  (CNQ)

Cost: $147.25 

CNQ  Analyst Estimates | MarketWatch

Website: Canadian Natural Resources

I discussed this stock in my last post where I summarized the last earnings report. Item # 1.G. Restarted CNQ - Bought 5 at $31.86; 5 at $40.85  (12/19/24 Post); SEC Filed Earnings Press Release

New Average cost per share: $30.72 (15 shares)

I will continue averaging down in 5 share lots. 

Dividend: Quarterly at C$.565 per share (C$2.25 annually), last raised from $.525 effective for the 2025 first quarter payment. 

For owners of the USD priced CNQ shares, the dividend will be converted into USDs. 

Canadian Dollar to US Dollar Exchange Rate Chart | Xe

When paid into a U.S. citizens taxable account, Canada will withhold a 15% tax. 

Foreign Tax: Credit or Deduction? | Charles Schwab

There is no withholding under the current tax treaty when dividends are paid into a U.S. citizens retirement account. This applies only to non-pass through entities and would exclude Canadian REITs whose dividends would be subject to withholding even when paid into a retirement account. 

Last Ex Dividend: 12/13/24 (owned 5 shares as of) 

The Canadian Dollar will be adversely impacted by Trump carrying through with his tariff threats. Trump's 25% tariffs an existential threat to Canada's auto industry; Trump's tariff threat could force Canada to face tough decisions on sovereignty | CBC News The CAD/USD exchange rate declined some after Trump made that tariff threat. A further decline will cause CNQ to underperform the Toronto listed shares that trade in CADs. 

Canadian Dollar to US Dollar Exchange Rate Chart | Xe

I. Added to DOW - Bought 3 at $39.41: 

Quote: Dow Inc. (DOW)

Cost: $118.23

DOW SEC Filings

DOW  Analyst Estimates | MarketWatch

When the price fell below $40, I switched from 2 share buys to 3.  

Chemical stocks are currently in a bear market due primarily to concerns about demand. 

New Average cost per share: $44.92 (29+ shares)

Dividend: Quarterly at $.70 per share ($2.8 annually)

DOW Dividend History | Nasdaq

I am reinvesting the dividend as another means to average down. 

Yield at $44.92: 6.23%

Last Ex Dividend: 11/29/24

Last Earnings Report (Q/E 9/30/24): I discussed this report here: Item #2.G. Added to DOW - Bought 2 at $48.39; 1 at $47.82 (11/7/24 Post); SEC Filed Press Release

Last Elimination: Item # 1.B. Eliminated DOW in 2 Taxable Accounts - Sold 5 at $59.71; 8 at $60.02 (2/13/23 Post) 

J. Added to SWZ - Bought 5 at $7.56: 

Quote: Swiss Helvetia Fund Inc. Overview  - Stock CEF

Cost: $37.8

Sponsor's website: Schroders | SWZ

SEC Filings

SEC Filing Holdings as of 9/30/24

SEC Filed Semiannual Annual Report for the period ending 6/30/24

Last Discussed: Item # 2.B. Bought 10 SWZ at $7.8 (11/27/24 Post) 

New Average cost per share: $7.69 (115 shares)

Dividend: Quarterly and managed based on a percentage of an annual rate equal to 6% of assets. A dividend will generally remain in effect for 3 or 4 quarters and then reset up or down based on changes in the fund's assets. The quarterly dividend was at $.129 per share for 4 quarters and was raised to $.1458 effective for the 2024 4th quarter payment. 

SWZ Dividend History | Nasdaq

Data Date of 12/19/24 Trade: 

Closing Net Asset value per share: $8.89

Closing Market Price: $7.59

Discount: -14.62%

Average 3 year discount: 14.75%

Sourced: SWZ - CEF Connect 

The main reason for owning this CEF is to own assets whose value is priced in Swiss Francs. The secondary reasons are to generate some dividend and capital gains income.  

Last Sell Discussion: Item # 2.C. Sold 10 at $8.81 (10/10/24 Post)(profit snapshot = $11.15)

K. Added to WHF - Bought 5 at $10; 5 at $9.6: 

Quote: WhiteHorse Finance Inc. (WHF) - Externally Managed BDC

Cost: $98

WHF SEC Filings

SEC Filed 2023 Annual Report (risk factor summary starts at page 30 and ends at page 78)

New Average cost per share: $11.12 (35 shares)

Dividend: Quarterly at $.385 per share ($1.54 annually)

WhiteHorse Finance (WHF) Stock Dividend History & Date

A special dividend of $.245 per share was paid on 12/10, going ex dividend on 10/31/24. I owned 20 shares as of. 

Yield at New AC = 13.85% (regular dividend only)

Last Ex Dividend: 12/20/24 (owned 25 as of)

I discussed the last earnings report in this post: Item # 1.D. Added to WHF - Bought 5 at $10.65 (12/19/24 Post); SEC Filed Press Release and SEC Filed Earnings  Presentation

The stock is currently in a falling knife mode. 

L. Added to LXP in Schwab Account - Bought 10 at $8.29: 

Quote: LXP Industrial Trust  (LXP)

Properties:  Industrial REIT

SEC Filed Supplemental for the Q/E 9/30/24 at page 17. A list of properties can be found at pages 21-25. 

Top 15 Tenants: 

Last Discussed: Item # 1.I. Pared LXP in Schwab Account - Sold 20 at  $10.53 (8/2/24 Post)(profit snapshot = $23.61). I have now bought bought 10 of those 20 shares. 

LXP SEC Filings

10-Q for the Q/E 9/30/24 

Website: LXP Industrial Trust - Preeminent single-tenant U.S. industrial REIT

Properties | LXP Industrial Trust

New average cost per share: $8.39 (70 shares)

Snapshot Intraday on 12/23/24 after add

Dividend: Quarterly at $.135 per share ($.54 annually)

Yield at New AC = 6.436%

Next Ex Dividend: 12/31/24

Last Earnings Report (Q/E 9/30/24): 

SEC Filed Press Release 

Revenue: $85.422M

GAAP E.P.S. Attributable to common shares: $.02

There is outstanding an equity preferred convertible stock. 

FFO per share: $.15

AFFO per share: $.16, down from $.18 in the 2023 third quarter. 

Funds Available for Distribution: $44.138M

FAD per share: $.15  (using diluted share count of 291.6+M)

GAAP to AFFO Reconciliation: 

Subsequent Events:

Other Sell Discussions: Item # 2.D. Eliminated Duplicate Position in LXP - Sold 20 at $10.29 - Fidelity Account (7/26/24 Post)(profit snapshot = $32.25); Item # 1.D. Eliminated LXP - Sold 20+ at $11.57 (2/13/23 Post)(profit snapshot = $33.37); Item # 1.C. Sold 137+ LXP at $9.08 and 53 at $9.06 In 2 Separate Roth IRA Accounts (9/12/18 Post)(profit snapshot = $914.11); Sold 100 LXP in Fidelity Roth IRA at $11.15 (1/6/17 comment- profit of $271.9 referenced with no snapshot)(snapshot in Gateway Post for Equity REITs); Item # 2 Sold 250 LXP on Ex-Dividend Date in Two Taxable Accounts-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot = $224.65); Item # 1.B. Eliminated LXP - Sold 155+ at $9.46 (6/26/19 Post)(profit snapshot = $6.37); Item # 1.B. Sold 108+ LXP at $9.45-Used Commission Free Trade (2/6/19 Post)(profit snapshot = $79.9);; Item # 1 Sold 150 LXP in Vanguard Roth IRA-Update For Equity REIT Basket Strategy As Of 6/24/16 - South Gent | Seeking Alpha (profit snapshot = $80.19); Item # 1. Sold 54 LXP at $11.44 Vanguard Roth IRA (1/27/15 Post)(profit snapshot = $64.4); Item # 1 Sold 101+ LXP at $10.65 (10/28/14)(profit snapshot = $51.76)   

LXP Realized Gains to Date: $1,989.94

This REIT has proven that it is not suitable for a long term hold. I have been successful so far in trading it.  

K. Added to CAG - Bought 1 at $27.02: 

Quote: Conagra Brands Inc.  (CAG)

CAG SEC Filings

SEC Filed Annual Report for the Fiscal Year ending 5/25/24

Brands | Conagra Brands

CAG Analyst Estimates | MarketWatch Earnings have stagnated. 

Last Discussed: Item # 2.H. Sold 5 CAG at $33.07 (9/12/24 Post) 

Last Buy Discussion: Item # 1.B. Added to CAG - Bought 2 at $28.07; 2 at $27.68; 3 at $27.31; 3 at $27.05; 5 at $26.95; 5 at $26.7; 5 at $26.4; 5 at $25.8 (10/7/2023 Post)

New average cost per share: $28 (57+ shares)

Dividend: Quarterly at $.35 per share ($1.4 annually), last raised from $.33 effective for the 2023 third quarter payment. 

CAG Dividend History | Nasdaq

I am reinvesting the dividend. 

Yield at $28 TC  = 5%

Next Ex Dividend: 1/27/25

Last Earnings Report (F/Q ending 11/24/24): This is the second fiscal quarter of the 2025 fiscal year. 

SEC Filed Earnings Press Release and 10-Q 

GAAP E.P.S. = $.59, a 1.7% decrease

Non-GAAP - $.70, a 1.4% decrease

Revenues: $3.1951B, down from $3.2081B

GAAP to Non-GAAP: 

Fiscal 2025 Outlook: Adjusted E.P.S. $2.45 to $2.5 

Fiscal 2024 Adjusted E.P.S. Actual = $2.67, see SEC Filed Press Release for the 2024 4th Fiscal Quarter 

The problems can be summed up as a lack of volume and earnings growth that are not showing any signs of being resolved positively. 

Packaged food companies may have experienced an increase in organic sales during the recent high inflation period, but that was due to price increases offsetting volume declines. 

2. Corporate Bonds - $1,000 Par Value per bond: 

A. Bought 2 Tyson Foods 4% SU Maturing on 3/1/26 at a Total Cost of 99.264: 

Issuer: Tyson Foods Inc. Cl A (TSN) 

I have never owned the common stock. 

TSN  Analyst Estimates | MarketWatch

TSN SEC Filings 

SEC Filed Earnings Press Release for the F/Q ending 9/28/24 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB

YTM at Total Cost: 4.63%

Current Yield at TC = 4.03%

B. Bought 2 Alexandria REIT 4.3% SU Maturing on 1/15/26 at a Total Cost of 99.577 - Vanguard Taxable Account: 

Issuer: Alexandria Real Estate Equities Inc. (ARE) 

ARE SEC Filings 

ARCC 10-Q for the Q/E 9/30/24 

SEC Filed Earnings Report for the Q/E 9/30/24 (revenue = $791.6M, FFO per share at $2.37)

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa1/BBB+

YTM at Total Cost: 4.704%

Current Yield at TC: 4.318%

I now own 4 bonds. 

C. Bought 2 NXP 3.875% SU Maturing on 6/18/26 at a Total Cost of 98.851:

Issuer: NXP Semiconductors N.V. (NXPI) 

NXPI Analyst Estimates | MarketWatch

NXPI SEC Filings 

10-Q for the Q/E 9/30/24 Debt is listed at page 15. 

SEC Filed Earnings Press Releae for the Q/E 9/30/24 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa3/BBB+

YTM at Total Cost: 4.678%

Current Yield at Total Cost: 3.92%

D. Bought 2 Roper Technologies 3.85% SU Maturing on 12/15/25 at a Total Cost of 99.2: 

Issuer: Roper Technologies Inc.  (ROP) 

ROP Analyst Estimates | MarketWatch

ROP SEC Filings 

SEC Filed Earnings Press Release for the Q/E 9/30/24 

10-Q for the Q/E 9/30/24 

Finra Page: Bond Page | FINRA.org

Credit Ratings: Baa2/BBB+

YTM at Total Cost: 4.689%

Current Yield at TC: 3.881%

E. Bought 2 Brookfield Finance 4.25% SU Maturing on 6/1/26 at a Total Cost of 99.428:

Issuer: Wholly owned subsidiary of Brookfield Asset Management Ltd. Cl A  (BAM) who guarantees the notes.  

Prospectus 

BAM Analyst Estimates | MarketWatch

Website: Brookfield Asset Management (BAM)

Brookfield Asset Management Announces Record Third Quarter Results | Brookfield Asset Management (BAM)

Finra Page: Bond Page | FINRA.org

Credit Ratings: A3/A-

YTM at Total Cost: 4.663%

Current Yield at TC: 4.274%

I am replacing in advance 2 Brookfield SU notes that mature on 1/15/25: 

Third Party Prices as of 12/19/24

 3. Small Ball Sells: 

A. Pared KMI - Sold 10 of 100 at 26.44 - Vanguard Account:

Quote: Kinder Morgan Inc. (KMI) - Energy Infrastructure

Proceeds: $254.34

Website: Energy Infrastructure & Solutions | Kinder Morgan

Asset Map | Kinder Morgan

KMI Analyst Estimates | MarketWatch

KMI SEC Filings

10-Q for the Q/E 9/30/24 

Profit Snapshot: $124.28

Remaining Shares: 90

Average cost per share: $14.01

Price as of 12/19/24

This is part of a 100 share lot that was purchased at $15.89: Item # 1. Bought 100 KMI in Vanguard Taxable Account at $15.89 (1/7/22 Post) The tax cost basis was reduced by part of the dividends being classified as return of capital.  

Dividend: Quarterly at $.2875 per share ($1.15 annually), last raised from $.2825 effective for the 2024 second quarter payment. 

Kinder Morgan Dividend History

2023 Dividend Tax Treatment:

2022 Dividend Tax Treatment: 

In the 2024 form, KMI states that none of the 2024 dividend will have ROC support based on information that it has at that time. 

Yield at New AC = 8.21%

Last Ex Dividend: 10/31/24 (owned all as of)

Last Earnings Report (Q/E 9/30/24): 

SEC Filed Press Release 

Revenues: $3.699B

GAAP E.P.S. = $.28 

Adjusted E.P.S. $.25 

Distributable Cash Flow per share: $.49

GAAP to DCF Reconciliation: 

Other Sell Discussion: Item  3.E. Eliminated KMI in 2 Taxable Accounts - Sold 10 at $17.34 and 17+ at $17.37 (2/27/23 Post)(profit snapshot = $148.56) 

KMI SU Bonds: I own 3 of the 4.3% SU bonds that mature on 6/1/25.

B. Pared CTO Again in Schwab Account - Sold 8 at $20.52: 

Quote: CTO Realty Growth Inc. (CTO) - Externally Managed REIT

Proceeds: $164.16

I sold my highest cost lots.  

CTO SEC Filings

10-Q for the Q/E 9/30/24

Profit Snapshot: $15.68

New Average cost per share this Account:  $16.95 (89+ shares)

Snapshot Intraday on 12/17/24 - 1 Day after pare 

The AC was reduced from $17.08. 

Dividend: Quarterly at $.38 per share ($1.52 annually) 

CTO Stock Dividend History & Date

There was a 3 for 1 stock split in 2022. 

Yield at New AC = 8.97%

Last Ex Dividend: 12/12/24

Last Buy Discussion: Item # 1.B. Added to CTO - Bought 5 in Schwab Account at $17.13 (5/10/24 Post)

Last Earnings Report (Q/E 9/30/24 Post): I discussed this report in my last post and have nothing further to add here. Item # 2.A. Pared CTO in Schwab Account - Sold 13 at $20.37 (12/12/24 Post)(profit snapshot = $12.89); SEC Filed Press Release 

Equity Preferred Stock: I own the CTO Realty Growth Inc. 6.375% Cumulative Preferred Series A. 

Last CTO.PRA Discussions: Item # 2.C. Added to CTOPRA - Bought 3 at $17.77(11/11/2023 Post); Item # 1.A. Bought 5 CTOPRA at $18.5; 2 at $17.8 (9/30/23 Post)

C. Pared CGBD in Fidelity Account - Sold 9+ at $18.11: 

Quote: Carlyle Secured Lending Inc. (CGBD) - Externally Managed BDC

Proceeds: $164.08

Using the specific identification method, I sold my highest cost shares. 

CGBD SEC Filings

Profit Snapshot: $83.93 

Remaining Shares this Account: 

New average cost per share this account:  $6.58 (22+ Shares)

Regular Dividend: Quarterly at $.40 per share

CGBD Stock Dividend History & Date

Special Dividends:   

2024 special dividends = $.27 per share (included $.05 that will go ex dividend on 12/31/24 with a 1/17/25 pay date) 

2023 special dividends = $.28 per share (includes $.07 per share that went ex dividend on 12/28/23 with a 1/18/25 payment date) 

Yield at New AC =  24.316% (regular dividend only) 

Next Ex Dividend: 12/31/24

Last Earnings Report (Q/E 9/30/24): I discussed this report in a recent post and have nothing further to add. Item # 1.C. Pared CGBD in Schwab Account - Sold 10 at $17.06 ( )(profit snapshot = $32) 

Last Sell Discussion in my Fidelity Account: Item #2.D. Pared Duplicate Position in Fidelity Account - Sold 2 at $16.78 (9/12/24)(profit snapshot = $14.69). That sell reduced my average cost per share in my Fidelity account to $7.24. I discussed the 2024 second quarter report in that post. SEC Filed Earnings Presentation

Other Sell Discussions:  Item # 2.F. Pared CGBD in Schwab Account - Sold 6 at $17.37 (9/26/24 Post)(profit snapshot = $20.63); Item # 2.D. Pared Duplicate Position in CGBD - Sold 9 at $17.57 (Schwab Account) (5/10/24 Post)(profit snapshot = $4.8); Item # 2.C. Pared CGBD in Fidelity Account - Sold 7+ at $17.41 (3/15/24 Post)(profit snapshot = $37.81); Item # 3.H. Eliminated CGBD in Vanguard Taxable Account - Sold 10 at $15.1 (2/5/23 Post)(profit snapshot = $65.6); Item # 2.E. Pared CBGD in Fidelity Taxable Account - Sold 25+ at $14.46 (3/24/22 Post)(profit snapshot = $31.09) 

Last Buy Discussion: Item # 1.B.  Added 10 CGBD at $13.95; 10 at $13.5; 10 at $12.6- Used Commission Free Trades (1/13/19 Post)

Goal: Any total return in excess of the dividend payments.  

D. Pared ARCC Again - Sold 5 at $21.2 (Schwab Account):

Quote: Ares Capital Corp. - Externally Managed BDC

Proceeds: $106.03

ARCC SEC Filings

2023 SEC Filed Annual Report (Risk factor summary starts at page 23 and ends at page 54)

Profit Snapshot: $36.78

New average cost per share this account:  $12.2 (20+ Shares) 

Snapshot Intraday 1 Day after pare

The AC was reduced $12.52.

Regular Dividend: Quarterly at $.48 per share ($1.92 annually)

ARCC Stock Dividend History & Date

Special dividends were paid in 2022. 

Yield at New AC:  15.74%

Last Ex Dividend:  12/13/24 (owned all as of)

Last Earnings Report (Q/E 9/30/24): I discussed this report in a recent post: Item # 2.E. Pared ARCC in Fidelity Account - Sold 5 at $21.64 (11/27/24 Post)(profit snapshot = $48.01); SEC Filed Press Release 

Other Sell Discussions: Item # 4.G. Pared ARCC in Fidelity Account - Sold 5 at $21.76 (10/24/24 Post)(profit snapshot = $47.2); Item # 2.D. Pared ARCC in Fidelity Account - Sold 4 at $20.95  (8/8/24 Post)(profit snapshot = $33.88); Item # 3.B. Pared ARCC - Sold 2 at $20.36 (1/20/24 Post)(profit snapshot = $14.04); Item # 2.I. Pared ARCC in Schwab Account - Sold 4 at $20.72 (5/12/22 Post)(profit snapshot = $22.94); Item # 1.D. Eliminated ARCC in Vanguard Taxable Account - Sold 10 at $22.16 (1/27/22 Post)(profit snapshot = $83.53); Item # 1.M. Sold 1 ARCC at $21.61- Fidelity Account (10/20/21 Post)(profit snapshot = $9.1); Item # 1.J. Sold 1 ARCC at $19.27 (4/30/21 Post)(profit snapshot = $6.84); Item # 3.C. Pared ARCC in Schwab Taxable Account-Sold 20 at $17,44 and Item #3.D. Pared ARCC in Fidelity Taxable-Sold 5 at $17.32 (1/1/21 Post)(profit snapshots = $39.52: post contains in Item # 3.D. prior profit snapshots including those that were not discussed); Item # 1.C. Sold 50 ARCC at $16.98 (6/18/18 Post)(profit snapshot $63.24); Item 2.A. Eliminated ARCC-Sold Remaining 50 Shares at $17.25 (2/15/17 Post)(profit snapshot = $160.51; contains snapshot of 100 share in RI in 2016, profit snapshot of $105.57); Item # 1, Sold 102+ ARCC at $15.32  and 50 at $15.26: Update For Portfolio Positioning And Management As Of 8/21/16-South Gent | Seeking Alpha (profit snapshot =$62.72); Item # 1 Sold 100 ARCC at $17.195 (4/28/15 Post)(profit snapshot = $116.36); Item # 3 Sold 100 ARCC Roth IRA at $17.05 (2/25/15 Post)(profit snapshot $19.97); Item # 2. Sold 100 ARCC at $17.54-IRAs in Two 50 Share Lots (9/13/12 Post)(profit snapshots = $53.19) 

Goal:  As with all BDC stocks, the goal is simply to earn a return in excess of the dividends paid.  

ARCC Realized Gains to Date = $1,058.05

ARCC SU Bonds: I own 10. 

6 of the 4.25% SU that mature on 3/12/25

4 of the 3.25% SU that mature on 7/15/25

As I move closer to the 3/12/25 maturity, I will consider buying 2 that mature in 2026. 

4. Treasury Bills Purchased at Auction: 

All the bills were purchased in my Schwab account where the sweep pays .2%. 

A. Bought 5 Treasury Bills at the 12/23/24 Auction: 

91 Day Bills

Matures on 3/27/25

Interest: $53.39

Investment Rate: 4.345%

B. Bought 2 Treasury Bills at the 12/23/24 Auction: 

182 Day Bills

Mature on 6/26/25

Interest: $42.16

Investment Rate: 4.319% 

C. Bought 1 Treasury Bill at the 12/23/24 Auction: 

1 Year T Bill

Matures on 12/26/25

Interest: $41.27

Investment Rate: 4.259%

5. REIT Equity Preferred Stock: 

The 2 REIT equity preferred stocks discussed in this section are both high risk IMO. 

I decided to eliminate the remaining position in HPPPRC when the common shares slipped below $3, which highlights the risk, and to redeploy the proceeds into the higher yielding HTIA.  

A. Added 5 HTIA in Schwab Account at $14.5; 5 at $14.15: 

Quote: National Healthcare Properties Inc. 7.375% Cumulative Preferred Series A Stock (U.S.: Nasdaq 

Cost: $143.25

52 Week Range: $13.5-$17.28

Issuer: This is private REIT that owns healthcare properties. 

The Company acquires, owns and manages a diversified portfolio of healthcare-related real estate, focused on outpatient medical facilities (“OMFs”) and senior housing operating properties (“SHOPs”). . . . As of September 30, 2024, the Company owned 198 properties located in 32 states and comprised of 8.6 million rentable square feet." 10-Q for the Q/E 9/30/24 The company has to make SEC filings since it has publicly traded preferred shares outstanding. 

Properties as of 9/30/24 and % Leased: 

10-Q at page 43 

GAAP Loss Calculation for Q/E 9/30/24: 

P.44 10-Q

GAAP to AFFO Reconciliation:  

Sources of payments to preferred shareholders: Page 59, 10-Q

"disposed of seven OMFs, two SHOPs and one land parcel during the nine months ended September 30, 2024 for an aggregate contract sales price of $82.6 million. These proceeds were primarily used to fund a portion of the Closing Payments."

Last Discussed: Item # 6.A. Restarted HTIA in my Schwab Account - Bought 10 at $14.97  (8/29/24 Post)

New average cost per share this account: $14.65 (20 shares)

Yield at $14.65: 12.59%

Calculation: .07375% coupon x. $25 par value = $1.84375 annual per share dividend ÷ $14.65 Total Cost per share = 12.5853%.

The dividend yield confirms the high risk, primarily involving the risk that the preferred dividends will be deferred until the REIT is on firmer financial footing.  

Last Ex Dividend: 10/4/24

Next Ex Dividend: 1/3/25

HTIA Stock Dividend History & Date

National Healthcare Properties Inc. Announces Preferred Stock Dividends and Ticker Symbol Updates 

Prospectus (Risk factor discussion starts at page 12 and ends at page 53)

Par Value: $25

Stopper Clause: Yes, see page 90 

Optional Call: On or after 12/11/24

This REIT recently internalized management which required a significant payment to get rid of the external management company. The REIT paid $75M in cash and a promissory note in the principal amount of $30.3M.  

As noted in a prior discussion of  this private REIT, the external manager was not generating enough income to pay the common shareholders a cash dividend. This REIT declared quarterly dividends entirely in shares of its common stock starting in October 2020 until June 2024. The REIT did declare that it would no longer be paying a common dividend in stock, see page 29, 10-Q. 

The Stopper Clause is only activated when the company pays a cash dividend to the common shareholders. 

Currently, there is no legal restraint on deferring the cumulative preferred stock dividend. 

If the preferred dividend is deferred, the entire deferred amount has to be paid once the company pays a cash dividend to the common shareholders. 

To sum up, one risk is that this REIT can legally defer the cumulative preferred share dividend since it is not paying a common share cash dividend or using cash to buy back common shares. 

The poor operating performance under the external managers, the current debt level and refinancing requirements, and the cash and promissory note paid to get rid of the external managers, when combined, make a deferral more likely when the legal restraint provided in the Stopper Clause is not present. 

Another risk is that the operating results have been poor, as measured by FFO and AFFO, and the termination fee that will was paid upon internalization will add to the cash flow strain. 

Getting rid of the external manager is a long term positive however. 

There will be savings in management costs through internalization, and the REIT may be a takeover target with the external manager gone. That would be the best option for all shareholders. 

If a takeover was done by one of the major healthcare REITs like DOC or HR, the credit and dividend deferral concerns reflected in the HTIA share price would be alleviated since those companies are currently paying cash dividends to common shareholders. A redemption at par value may also occur when and if this REIT is acquired by an investment grade company.  

Last Sell Discussion: Item # 5.A. Eliminated Duplicate Position in HTIA -Sold 20 at $17 in Schwab Account (1/6/24 Post)(profit snapshot  = $45.87) 

Overall, the risk is IMO worth some dollar exposure given the dividend yield. 

I also own 25 shares in my Fidelity account with a lower AC per share: $13.83

I am currently at my maximum exposure given the risks. 

B. Eliminated HPP.PRC - Sold 15 shares at $13.65:

Quote: Hudson Pacific Properties Inc. 4.750% Cumulative Preferred Series C 

Proceeds: $205.74

I sold on the ex dividend date.

Issuer: Hudson Pacific Properties Inc.  (HPP)

HPP SEC Filings

10-Q for the Q/E 9/30/24

SEC Filed Press Release for the Q/E 9/30/24

As previously discussed, this REIT has eliminated its common share dividend but is continuing to pay this preferred share dividend. There is currently no restraint in the Stopper Clause that would prevent this REIT from deferring payment of the cumulative preferred dividend. 

Last Discussed: Item # 5.A. Eliminated HPP.PRC in Fidelity Account  - Sold 125 at $13.76 (11/27/24 Post)(profit snapshot = $174.34) 

Profit Snapshot: +$25.1

Current Position: None

HPPPRC Prospectus

Par Value: $25 (offered at $25 in November 2021)

Placement in the Capital Structure: Equity Preferred Stock, senior only to common stock. 

Maturity: Potentially perpetual unless called by issuer. 

Optional Call Date: Anytime on or after 11/16/26. Given the low coupon and financial difficulties, I would not expect a call in my lifetime. 

Stopper Clause: Standard. The Stopper Clause prevents the issuer from deferring payment of a cumulative preferred dividend while paying a cash common stock dividend or using cash to buy back common stock. The Clause enforces the preferred stock's superior claim to cash compared only to the common stock. Since HPP has eliminated its common share cash dividend, there is no legal impediment to deferring the preferred dividend payment except using cash to buy back common stock. 

I am done with this preferred stock at least until I see a major improvement in operating performance. This REIT is top heavy with debt. The dividend yield is not worth the credit risk to me. I have had negative reactions to at least the last four quarterly reports. 

Other Sell Discussions: Item # 4.A. Pared HPPPRC - Sold 15 at $15.27 (10/24/24 Post)(Loss Snapshot = $21.4); Item # 5.A. Eliminated Duplicate Positions in HPPPRC - Sold 25 at $14.27 and 40 at $14.22 (3/15/24 Post)(profit snapshots = $155.87)

6. Treasury Notes Purchased at Auction: 

All of these purchases were made in my Schwab account. 

A. Bought 2 Treasury Notes at the 12/23/24 Auction: 

2 Year Note

Matures on 12/31/26

Coupon: 4.25%

Bought at 99.838827

YTM:  4.335%

If this note declines in price, which will increase both the current yield and YTM, due to a rise in interest rates, I will consider buying 1 or more in the secondary market. I am currently very light in December 2026 maturities in my bond ladder. 

B. Bought 1 Treasury Note at the 12/24/24 Auction: 

5 Year Note

Matures on 12/31/29

Bought at 99.5431

Coupon: 4.375%

YTM: 4.478%

7. Treasury Notes Purchased in the Secondary Market: 

A. Bought 1 Treasury Note 4% Coupon Maturing on 2/15/26 at a Total Cost of 99.263: 

YTM  at TC =  4.329%

I now own 3 notes, all purchased in the secondary market.  

8. Exchange Traded Baby Bonds: 

A. Added to EMP in Schwab Account - Bought 5 at $21.55: 

Quote: Entergy Mississippi LLC 4.9% First Mortgage Bond

Last Discussed: Item # 5.A. Bought 5 EMP in Schwab Account at $22.1 (12/12/24 Post) 

This potentially long term first mortgage bond has struggled as long term interest rates started to rise in September.  

Issuer: Wholly owned operating subsidiary of Entergy Corp. (ETR) 

Cost: $107.75

Prospectus

Par Value: $25

Security: First Mortgage lien on substantially all assets. 

Next Ex Interest Date: 12/31/23

Quarterly interest payments

Maturity: 10/1/2066, with no call protection. 

Interest paid quarterly. 

Trades Flat. 

Interest rate risk: High and asymmetric in favor of the issuer. 

I currently have no concerns about the credit risk given the first lien priority and the issuer being an electric utility operating subsidiary of one of the largest utility holding companies in the U.S. 

New AC per share this account: $22.01 (65 shares)

Yield at New AC: 5.57%

Calculation: 4.9% coupon x. $25 par value = $1.225 in annual interest per share ÷ $22.01 average cost per share = 5.5657%  

Some Sell Discussions: Item # 5.A. Pared EMP-Sold 5 at $26.84  (6/27/20 Post); Item # 4.A. Eliminated EMP-Sold 70 at $24.87 (5/1/19 Post)(largest gain snapshot = $207.92); Item # 2.B. Sold 30 EMP at $24.44  (2/13/19 Post); Item # 2.A. Sold 50 EMP at $24.47 (7/22/17 Post)

EMP Realized Gains to Date: $464.69 (snapshots in  Item # 9.A. and in my Gateway Post for Exchange Traded Baby Bonds)

Maximum Position in all Taxable Accounts: 300 shares

Current Position in 3 Taxable Accounts: 205 shares

Disclaimer: I am not a financial advisor, but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sale of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals, and situational risks. I can only make that kind of assessment for myself and my family members.