As we look at the high yield stocks today, I want to share one of our recent purchases. We bought these shares for the attractive yield. The upside on share prices significantly enhances the total return prospects. Prices got wild in June leading to some significant differences in the risk/reward profiles for shares.
Most of the section comes from a recent trade alert. Added $7,000 of cash to our portfolio. This is adjusted for in the returns section of our spreadsheet. Purchased 515 shares of PMT-C (PMT.PC) at $19.27. Currently this is one of my favorite picks for tax-advantaged accounts. While the preferred shares from PMT fell harder, the preferred shares from NRZ were also down worse than the sector average. At current valuations, the owners of PMT and NRZ get the better management team and get the origination business for free. PMT-C has a fixed-rate dividend providing a healthy stripped yield of 8.87%. Without the dividend accrual, it would be 8.76%. That’s a big enough yield to feel comfortable against rising interest rates and the huge discount to call value gives us plenty of room for upside in the future.
Source: Seeking Alpha
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