As referenced in the weekly articles on mortgage REITs and BDCs, I’m favoring fixed-to-floating preferred shares for an attractive risk/reward profile.
I’m adding to my position in one of these preferred shares that floats within the next year. If short-term rates remain roughly similar to where they are today, it will produce a dramatic dividend increase.
I still see quite a bit of opportunity here.
We’ve recently seen a big rally in several of the preferred shares that sold off over the prior two weeks. That’s a positive indicator for shares with upcoming floating dates, especially if they didn’t catch the big rally yet.