Key Takeaway
Diana’s (DSX) Series B (DSX.PB) preferred equity is a solid 10% yield investment proposal for a high yield fixed-income investor on the back of the following reasons:
1. Forecasted free cash flow yields 17% and 39% on my 2020 and 2021 estimates, providing strong coverage of the 10% preferred dividend yield.
2. Stress testing Diana's liquidity indicates that Series B dividend distribution is defensively positioned. The company's prudent capital allocation strategy and healthy cash balance as of June 30, 2020, are the main reasons.
3. Management reiterated its disciplined