Corteva Offers A Pair Of Preferred Shares To Consider

seekingalpha09-16

Corteva, Inc.'s preferred stocks ($3.50 Series and $4.50 Series) offer diversification away from financials, despite low yields and thin trading volumes.Corteva is a profitable agriculture company ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCorteva Offers A Pair Of Preferred Shares To Consider\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-16 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4720518-corteva-offers-a-pair-of-preferred-shares-to-consider><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Corteva, Inc.'s preferred stocks ($3.50 Series and $4.50 Series) offer diversification away from financials, despite low yields and thin trading volumes.Corteva is a profitable agriculture company ...</p>\n\n<a href=\"https://seekingalpha.com/article/4720518-corteva-offers-a-pair-of-preferred-shares-to-consider\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4535","symbol_name":"淡马锡持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4720518-corteva-offers-a-pair-of-preferred-shares-to-consider","article_id":"2467122812","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1181648465/image_1181648465.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2467122812","pubTimestamp":1726488000,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Corteva, Inc.'s preferred stocks ($3.50 Series and $4.50 Series) offer diversification away from financials, despite low yields and thin trading volumes.Corteva is a profitable agriculture company wit","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4535":"淡马锡持仓","BK4093":"化肥与农用药剂","LU1506573853.SGD":"MANULIFE GF GLOBAL EQUITY \"AA\" (SGD) INC","PFXF":"VanEck Preferred Securities ex Financials ETF","HOV":"霍夫纳尼安","BK4585":"ETF&股票定投概念","CTVA":"Corteva, Inc.","NPFD":"Nuveen Variable Rate Preferred & Income Fund","BK4588":"碎股","BK4088":"住宅建筑"},"translate_title":"Corteva提供两股优先股供考虑","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CTVA":1,"HOV":1,"NPFD":1,"PFXF":1,"US7Y.BOND":0.9,"US6M.BOND":0.9,"US5Y.BOND":0.9,"US10Y.BOND":0.9,"US12M.BOND":0.9,"US2Y.BOND":0.9,"US30Y.BOND":0.9,"US3Y.BOND":0.9,"US912797HE00.BOND":0.6,"US912797GW17.BOND":0.6},"content_text":"Corteva, Inc.'s preferred stocks ($3.50 Series and $4.50 Series) offer diversification away from financials, despite low yields and thin trading volumes.Corteva is a profitable agriculture company with global operations, mitigating default risk for its preferred stocks.Preferred stocks' small size and low coupon rates make them unlikely to be called or default, despite ongoing legal risks from the DuPont legacy.Hold existing positions for yield and diversification benefits; accumulating large positions is challenging due to low trading volumes.   jetcityimage Introduction With interest rates falling even before the Federal Open Market Committee (“FOMC”) cuts the federal funds rate (“FFR”), I have reviewed numerous preferred stocks issued by financial entities, as they account for a vast majority of what’s available. The one exception was Hovnanian Enterprises (HOV). This article covers a second non-financial issuer, Corteva (NYSE:CTVA). Reviewed here are both preferreds available:   Corteva, Inc., $3.50 Series Cumulative Preferred Stock (NYSE:CTA.PR.A)  Corteva, Inc., $4.50 Series Cumulative Preferred Stock (NYSE:CTA.PR.B).  Both issues were originally issued by the DuPont company from which Corteva was spun off from after the DuPont-Dow Chemical merged entity split into three parts. I reviewed how Corteva immediately started cutting benefits for their active and retirees (article link). Full disclosure: I retired as a Corteva employee (32 days) after 39 years with DuPont. While I like the yield, default protection, and diversifying effect, the low-volume results in an overall Hold rating. Corteva reviewed Data by YCharts As with any preferred stock or debt issue, understanding the company behind the issues is an essential part of the due diligence process. Seeking Alpha describes this company as (edited):  Corteva, Inc. operates in the agriculture business. It operates through two segments, Seed and Crop Protection. The Seed segment develops and supplies advanced germplasm and traits that produce optimum yield for farms. It offers trait technologies that enhance resistance to weather, disease, insects, and herbicides used to control weeds, as well as food and nutritional characteristics. The Crop Protection segment offers products that protect against weeds, insects and other pests, and diseases, as well as enhances crop health above and below ground through nitrogen management and seed-applied technologies. The company operates in the United States, Canada, Latin America, the Asia Pacific, Europe, the Middle East, and Africa. Corteva, Inc. was incorporated in 2018 and is headquartered in Indianapolis, Indiana.  Source: Seeking Alpha. The next chart shows the breakdown by region and product type. investors.corteva 2023 AR This show Corteva already has a major presence around the world and is not dependent on its home country. Crop Protection products are more important overseas than in the US market. The most recent financial statements show a profit-making company where the preferred stocks are well covered. Seeking Alpha CTVA Income Statement One risk Corteva keeps facing is its legacy ties to the DuPont company. While several lawsuits settled earlier this year, a “forever chemicals” lawsuit was just filed last month (article link). Looking at the balance sheet, we see the data from the end of 2023 and 2022, respectfully. investors.corteva 2023 AR With only $230m in preferred stock outstanding, Total Equity is 111X that level. Comparing the preferreds QuantumOnline \"A\"QuantumOnline \"B\" I included the history of the switchover only for the “A,” but it applies to both.   Factor PFD “A” PFD “B”   Size 1.67m shares .7m shares   Coupon 3.5% 4.5%   Call Date Any Time Any Time   Call price $102 $120   Price $60.02 $75.87   Yield 5.83% 5.99%   Click to enlarge Analysis  Even with the threat of more lawsuits, the small size of the preferred stocks makes their default unlikely. The low coupon on each makes them unlikely to be called too. With both selling around 60% of Par, open market retirement, while more likely, still little chance considering they were called when interest rates were artificially depressed. The small size outstanding makes trading very thin, requiring limit orders and patience to build a sizeable position. The sub-6% yield wouldn't be great except for the fact that owning these diversifies one preferred stock allocation away from Financials.  Conclusion If you own, keep holding. While I like the yield, default protection, and diversifying effect, the low-volume results in an overall Hold rating too; accumulating a large position would be very hard and time-consuming. That said, both issues sold for about 50% more in the time before the FOMC raised interest rates. Portfolio strategy Unless the ETF/CEF excludes Financial issuers such as the VanEck Preferred Securities ex Financials ETF (PFXF) does, owning a sector-diversified portfolio of preferred stocks takes work, especially analyzing non-payment and default risk for each issue. The next charts show how pickings outside Financials are tough to find.   S&P Global PFD stocks Many of the Financial preferred stocks come with two features, one good, and one not so. First the bad one: many are non-cumulative, meaning lost payments do NOT need to be made up. On the plus side, many were issued for Tier 1 capital purposes, which makes them less likely to be called than ones not part of the Tier 1 capital requirements. Final thoughts  For those of us who either don't have the time to do the proper due diligence or knowledge level, owning ETFs or CEFs makes sense. Within the universe of preferred stock CEFs, there is the opportunity to buy some discounted to their underlying value. That plus any leverage used enhances the yield investors can experience going in. One example is the Nuveen Variable Rate Preferred & Income Fund (NPFD), which currently trades at an 8% discount and offers investors a 10.7% yield.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.28.1","shortVersion":"4.28.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2467122812"}