The Almost Perfect Income Stock

.) The shares came out at a yield of the three-month LIBOR rate plus 0.75%, subject to a minimum yield of 4.00%, or a dollar a share per year. The dividends are non-cumulative. The stock has a call date of 10/31/2010, and based on the current price, the stock yields about 4.17%.

Currently, the LIBOR rate is around a quarter of a percent. So in the Goldman Sachs example, if interests rates rise and the LIBOR rate jumped up to 5%, then the yield would be adjusted to 5.75%.

Another example is MetLife Preferred Series A (MET-PA), also issued at 25, and issued with a yield calculated at the three-month LIBOR rate plus 1%, subject to a minimum yield of 4.00%. The stock has a call date of 9/15/10. Based on the current price of the stock, the yield is 4.23%.

Remember that even though these ARPS should be more stable than regular preferreds, they can still drop in value as you can see from the current prices for many of them. Since they were hammered during the market crash, many haven’t fully recovered, and there may be some interesting prospects worth looking into.

For a detailed list of adjustable rate preferred stocks, go to WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com