What Are the October Highlights for Dividend Investors?

Paul Dykewicz

Enjoy this recap about key news developments for dividend investors during October, featuring new issues, a possible merger and dividend suspensions.

New Issues in October of Preferred Stocks

There were three new preferred stock issues during October, as well as two new ETD (exchange-traded debt) issues.

First, apartment real estate investment trust (REIT) Bluerock Residential Growth REIT (NYSE: BRG) sold a new issue of preferred stock with some desirable features. The shares have a high coupon of 8.25% and asset coverage requirement of 200% and a put feature that lets you force a redempton. The shares now are trading on the NYSE and are priced just above par at $25.18. Details about this new issue can be found here.

Second, manufactured home community REIT UMH Properties (NYSE: UMH) sold a perpetual preferred issue with a good coupon of 8%. Despite what a person may think about mobile homes, this has been a darned good business for UMH. This issue has jumped to $26.40. It is trading with thin volume, but anyone who was lucky enough to buy the new issue would have done well in just two weeks. Check out the specifics.

Finally, Targa Resources Partners (NYSE: NGLS) sold a “Fixed-to-Floating” issue with a fixed coupon of 9% until 11/2020. This issue is trading just under par at $24.85 as investors are hesitant to wade into the master limited partnership (MLP) arena — even if it is a preferred issue. NGLS is a solid natural gas midstream company, but not highly sought after. Read further here.

New Issues in October of Exchange-Traded Debt

The Southern Company (NYSE: SO) sold a nice 6.25% subordinated note issue in October. It is a solid investment grade, but with a long-dated maturity. Investors seem to have gobbled up this issue and driven the price up to $26.40. With a maturity date of 2075 you would think this may be a risky holding but it shows quality trumps coupon and maturity date at this point in time. Income investors should not be expecting high- yield issues to outperform quality like they did in 2009-2010. Read the rest of the analysis.

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TravelCenters of America (NYSE: TA) sold an 8% senior note issue in October which is trading just above par at $25.13. This was fairly predictable, since the company already has an 8.25% and 8% issue outstanding. While first call dates and maturities differ in these issues, the terms are close to identical.

New REIT Issue for October

One new REIT issue worth highlighting came to market during October through American Farmland Company (NYSE: AFCO) at $8/share. The land owner was looking to come to market in a range of $8.50-$10.50 — which was wishful thinking given its current price of $7.20 and its current yield of 3.47%.

MLP Merger?

Refiner Northern Tier Energy (NYSE: NTI) announced it received a buyout offer from Western Refining (NYSE: WNR). Since the offer is just a 15% premium, NTI may reject this offer or negotiate a higher price.

MLP Distribution Suspensions

October was a busy month for distribution suspensions in the master limited partnership arena.

The following partnerships suspended their distributions — none of them are particularly surprising.

CVR Partners (NYSE: UAN) is a fertilizer company.

Emerge Energy (NYSE: EMES) is a frack sand and oil field service company.

Mid-Con Energy (Nasdaq: MCEP) is a upstream oil and gas producer.

Hi-Crush Partners (NYSE: HCLP) is a frack sand company.

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