Safe 7-8% Yield HCJ

Homeowners Choice (HCI), a Florida property and casualty insurer, recently sold 8% senior notes. I bought some today as they are a great deal. Here are the details:

  • Par Value is $25.
  • Currently trade around $26.33.
  • Quarterly dividend of $.50. At par value, they give a dividend of 8% annually.
  • They are callable on 01/30/2016 at $25. They mature on 01/30/2020.
  • They trade on NYSE under the symbol HCJ. 

The positives:

  • At current interest rates, a great deal for a medium term bonds. In the worst case, they will mature in 7 years. 
  • HCI is highly profitable $200+ million company.

The negatives:

  • HCI is not a multi billion dollar company.
  • Business is concentrated in Florida. A big hurricane could have an effect on their financials even though they are safeguarded by reinsurance. 

They offer a good risk/reward ratio. Here are the details of the security.

Disclosure: I own HCJ.

3 thoughts on “Safe 7-8% Yield HCJ

    • I generally think mortgage REITs are a bit risky. From what I understand, they borrow and use leverage to increase their income. What if there is a liquidity issue or they can’t borrow at the lower rates. Are there any that you have in mind?

      • I have been following a portfolio that owns about 15 M Reits, annual income of about 15% over 1 yr and equity gain of 5%. Securities include: AGNC, MTGE, NLY, ANH, ARR, CMO, CYS, HTS, IVR, MFA, PMT, RSO,TW

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