I have experienced call/prepayment risk firsthand as San Miguel Purefoods decided to redeem their Preferred shares (ticker: PFP) 4 years after its issue date last March 2011. The indicative dividend rate for PFP was 8% (@1000/sh) but since I bought mine at a premium (1009/sh incl. fees), this brings down my dividend yield to 7.14% (net). As the shares are to be redeemed less than 1 year since I started investing, I only get 3 out of 4 dividend payouts which gives me an actual yield of 4.5% (gross). Not bad, but could have been better.
Due to the early redemption, I need to find another instrument to shift these funds. I don't see any updated comprehensive list for Philippine Preferred shares; thus, created one on my own.
Since it is unlikely that you would be able to buy Preferred shares at Offer Price (unless you got it at IPO), it is important to check on the Yield to Maturity (YTM) with respect to the stock's price. There are lots of YTM calculators online which you can use to compute for the bond yield. Examples: Monkey Chimp and Investopedia
The list below only includes Preferred shares that has a history of giving out dividends consistently (behaves like a fixed income asset). Important things to note are the earliest redemption dates and examples of current yield with the default holding period of 5 years unless stated. Prices are as of 2/13/2015.
If there are other Dividend-giving preferred stocks that I have missed, please let me know on through the comments section and I'd gladly add them here.
| Issuer | Ticker | Listing Date | Earliest Redemption Date | Offer Price | Div Yield | Yield to Maturity |
|---|---|---|---|---|---|---|
| Ayala Corporation | ACPA | 11/25/08 | redeemed | 8.8800% | redeemed | |
| Ayala Corporation | ACPB1 | 11/15/13 | ?? | 500 | 5.2500% | @502: 5.103% for 3 yrs; 5.157% for 5 |
| Ayala Corporation | ACPB2 | 11/5/14 | 11/5/19 | 500 | 5.5750% | @505: 5.342% for 5 |
| First Gen | FGENG | 5/18/12 | 5/18/22 | 100 | 7.8080% | @106: 5.58% for 3 yrs; 6.37% for 5 |
| First Gen | FGENF | 7/25/11 | 7/25/18 | 100 | 8.0000% | @107.7: 5.16% for 3 yrs; 6.16% for 5 |
| Leisure and Resorts World | LRP | 11/3/14 | any time? | 1 | 8.5000% | @1.03: 5.34% if 1 year; 6.84% for 2 yrs |
| Petron | PPREF | 3/5/10 | 9.5281% | |||
| Petron | PRF2A | 9/3/14 | 9/1/19 | 1000 | 6.3000% | @1010: 6.06% |
| Petron | PRF2B | 9/3/14 | 9/1/21 | 1000 | 6.8583% | @1020: 6.38% |
| San Miguel Corp | SMCP1 | 12/8/10 | to be redeemed | 8.0000% | to be redeemed | |
| San Miguel Corp | SMC2A | 9/28/12 | 9/28/15 | 75 | 7.5000% | @76.2: 5.807% in 1 yr |
| San Miguel Corp | SMC2B | 9/28/12 | 9/28/17 | 75 | 7.6250% | @78.5: 5.883% for 3 yrs; 6.502% for 5 |
| San Miguel Corp | SMC2C | 9/28/12 | 9/28/19 | 75 | 8.0000% | @81.5: 4.828% for 3 yrs; 5.946% for 5 |
| San Miguel Purefoods | PFP | 3/11/11 | 3/11/14 | 1000 | 8.0000% | to be redeemed |
| San Miguel Purefoods | PFP2 | 3/12/15 | 3/12/18 | 1000 | 5.6569% | to be issued |
Rant:
My Preferred stock investment was placed through BPITrade. It's hard to keep track of dividend payouts since BPI Trade does not notify me through email for any incoming dividends or at least give out an e-receipt. History of transactions is also limited. Based on my experience, COL Financial and Philstocks (Accord Capital) provide these things; thus, are more reliable when it comes to keeping your preferred share investments. Not to mention, BPI Trade's customer service/support is the worst.
Default - A bit better than Common since Preferred shareholders has a higher priority of payment. Still, it is best to invest on companies that are less likely to go bankrupt.
Risk:
Liquidity - Preferred shares may not be as liquid as common shares which is significant if you would want to sell. It may take time before a buyer would match your desired offer price.Default - A bit better than Common since Preferred shareholders has a higher priority of payment. Still, it is best to invest on companies that are less likely to go bankrupt.
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