CA - Triton International Preferreds: Excessive Dividends To Brookfield Make 8% Yielding Preferred Shares Riskier

2024-05-27 10:40:00 ET

Summary

• Triton International's Q1 results show a decrease in leasing revenue and operating income compared to the previous year.
• The company paid a $200M dividend to its common shareholder, Brookfield Infrastructure, reducing the overall safety of the preferred shares.
• The preferred dividends are well covered by earnings, but the asset coverage ratio is worsening, indicating potential risks for preferred shareholders.

Introduction

After being acquired by Brookfield Infrastructure ( BIPC ) ( BIP ), the common shares of Triton International, a large container lessor, were delisted but all existing series of preferred shares remained outstanding . I currently own two series of preferred shares as I like the fixed income (without foreign withholding taxes on the preferred dividends) but as the risk has increased after the delisting of the common shares, I am planning to follow up the company and its financial performance on a quarterly basis. The moment I see something I don’t like, I will likely bail on my position. Triton is currently owned by Brookfield Infrastructure Partners, but BIP is not acting as a guarantor....

For further details see: