Have you considered the Trump effect on tourism in the USA, and how that might affect their earnings going forward? This impact only began after April, and probably won't be really visible until Q3. This would cut into their profits and will not be temporary, the only question is how much.
Scott, thanks for the question. One reason I’ve focused on the preferreds rather than the common is that, at an 8%+ yield, I feel I’m being adequately compensated for risks like this. That said, if conditions were to deteriorate meaningfully, the market could eventually demand a 9%+ yield on the preferreds. My view is that I don’t need any operational recovery from here for the preferreds to continue paying. The fact that they maintained payments through COVID-19 also gives me confidence that the risk you mentioned is unlikely to materially impact the preferred level.
Have you considered the Trump effect on tourism in the USA, and how that might affect their earnings going forward? This impact only began after April, and probably won't be really visible until Q3. This would cut into their profits and will not be temporary, the only question is how much.
Scott, thanks for the question. One reason I’ve focused on the preferreds rather than the common is that, at an 8%+ yield, I feel I’m being adequately compensated for risks like this. That said, if conditions were to deteriorate meaningfully, the market could eventually demand a 9%+ yield on the preferreds. My view is that I don’t need any operational recovery from here for the preferreds to continue paying. The fact that they maintained payments through COVID-19 also gives me confidence that the risk you mentioned is unlikely to materially impact the preferred level.