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.