No. of Recommendations: 8
I have some rules I follow, courtesy of Doug K. Le Du's book and a year's subscription to his newsletter.
My rules:
1) Moody's rating of Baa3 or better
2) coupon of 6% or better (but not too much better: one preferred I jumped on paid 10%, and that company went bankrupt. Maybe that was a one-off, maybe it's a limit.)
3) call date at least three years into the future
4) entry market price below par; that gives me a small capital gain when it's called. Not too far below par, though; that would indicate a company that's in trouble. "Too far below:" for a $25 par preferred, a market price in the $20-$22 range or lower is a deeply orange flag, if not outright red
5) alternatively, an entry market price not farther above par than what two dividend payments (quarterly or semi-annually if the latter is the payout schedule) can cover. That lets the early dividend payments cover the capital loss while subsequently aggregating to net income.
Searching QuantumOnline is a manual process. There used to a program (PreferredSearch)on SourceForge that searched QuantumOnline and Yahoo! to get market price and other data, but the author got tired of keeping up with Yahoo!'s constantly changing its stock data searchability, and he abandoned it. I think the package is still on SourceForge; if anyone has the skills to excise the Yahoo! part of the program so it at least continued to search QuantumOnline, that would be beneficial.
Eric Hines
