Summary
- We have identified a lower risk preferred stock coming from a Property REIT: The RLJ Lodging Trust preferred A stock.
- This REIT preferred stock has a safe 7.7% yield, the highest yield among low to moderately leveraged hotel REITs.
- Additionally, this preferred stock cannot be called and thus has the potential for large capital gains. It traded close to $29 per share in October of 2017.
- Due to its safety, unusually high yield, and high capital gains potential, we believe that RLJ preferred A stock is the best value among all REIT preferred stocks.
- RLJ-A should outperform other preferred stocks regardless of whether interest rates go up or down. It is opportunistic and suitable for conservative income members.
- Looking for a portfolio of ideas like this one? Members of High Dividend Opportunities get exclusive access to our model portfolio. Start your free trial today ยป
This article was jointly produced with Seeking Alpha author Preferred Stock Trader.
Overview
RLJ Lodging Trust (NYSE:RLJ) is an internally managed hotel REIT that specializes in premium-branded full-service hotels. To quote from their latest 10K SEC filings:
As of June 30, 2018, the Company owned 156 hotel properties with approximately 30,400 rooms, located in 26 states and the District of Columbia... No single hotel property accounted for more than 4.8% of our total revenue for the year ended December 31, 2017."
A large number of the hotels are Marriott and Hilton brands, with Hyatt and Wyndham also making up a fair number of hotels. They also own a 98.3% controlling interest in the DoubleTree Metropolitan Hotel New York City, and a 95% controlling interest in The Knickerbocker.
