Ellington Financial (EFC PRA)
Let us introduce another preferred stock with high yield potential. This is a classic example of a fixed-rate preferred stock that transitions to a floating interest rate after October 30th, 2024.
Stock Details:
Floating Interest Rate: 3M SOFR + 5.37%
Current Yield: 10.02% at a price of $25.00
The issuing company retains the right to redeem the shares at $25.00 plus accrued dividends at any time.
About the Parent Company:
Ellington Financial (EFC) is an MREIT (Mortgage REIT), a company that invests in residential mortgages.
Financial Health: Strong
Ellington Financial is a stable and well-positioned player in the industry, comparable to companies like NLY and AGNC.
Who Is This Investment Suitable For?
This stock is ideal for investors seeking:
✅ Low principal risk
It’s important to note that capital gains are not expected, but the stable dividend compensates for this. Even if the price temporarily dips below $25.00, investors can count on consistent income.
What Is 3M SOFR?
The 3-month SOFR (Secured Overnight Financing Rate) is an index tied to the U.S. base interest rate. It has replaced LIBOR and is determined by the Federal Reserve. The current 3M SOFR is 4.65%.
Conclusion:
This is an excellent opportunity for stable income with low risk. If you are a conservative investor seeking reliable returns, this preferred stock could be a great addition to your portfolio.
