RITM-PD
Doubled down on RITM-pd today under $20.60. Here is what I like.
1) It yields 8.5% right now. That is a very good yield for a preferred. So your getting Paid nicely a good place to park some cash.
2) Stock trades at a deep discount to it's call value. Hence if the the company tries to Call it, in 2026 You will have a nice gain from here as well.
3) Now why do I think it being called is possible. If rates are anywhere near here in 2022. There is a rate Reset, currently the 5 year is 3.672 and your getting that plus 6.22% in 2026. So If yields stays here. The rate reset is going to cause the payout to go significant higher. At current price the annual payout in 2026 will go from $1.75 to a whopping $2.47 or so as of right now. Hence why at 12% payout at current prices of the stock, I think it will be called. Which would make the yeild for the next 4 years almost 14% a year at total return. Not a bad place to park your money in my opinion. And i they don't call it, you will be getting a 12% a year rate starting in 2026 on interest if rates stay here, regardless can't see how the 5 year isn't geter than 0.78, hence I believe we will see higher payouts tha now in 2026.
The reason why I'm explaining this is I think it will be called and the rate reset is very favorable for RITM-pd holders as a potential catalyst and at 52 week lows your get 8.5% on essentially pretty much a glorified bond, which in my opinion, a very likely outcome of it being called at 2026, which would make you have annual returns of almost 14% counting the capital gains, buying it here. I think it is a interesting place to park some cash. Whether there is rain/shine in the market because it is a very good yield at this point for a preferred in my opinion. All is just my opinion, and I could always be wrong though.
