RLJ - RLJ Lodging Trust: I Don't Mind Locking In A 7.9% Yield

2024-06-11 10:30:00 ET

Summary

• RLJ Lodging Trust's preferred shares are attractive as they cannot be easily called by the issuer.
• The preferred dividends are well-covered, with a payout ratio of just over 10%.
• The balance sheet of RLJ Lodging Trust is strong, with a low LTV ratio and sufficient common equity.

Introduction

I like the so-called ‘busted’ preferred shares, as the issuer can’t easily call the securities. In RLJ Lodging Trust’s ( RLJ ) case, the preferred shares can only be called when the stock is trading at close to $90/share, and given the current share price of just under $10, I don’t expect that to happen anytime soon. I have a long position in RLJ’s preferred shares, which are trading with ( RLJ.PR.A ) as ticker symbol, and I continue to add to this position on weakness....

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