How does the declared dividend amount translate into an effective yield for Series A preferred shareholders?

Yield Translation

Fundamental Global’s Series A preferred shares carry an 8 % annual cumulative dividend rate on the assumed $100 par value. Because the dividend is paid quarterly, the cash amount per share for the June‑September period is:

[
\text{Quarterly dividend} = \frac{8\%}{4}\times \$100 = 2\% \times \$100 = \$2.00 per share.
]

The effective yield that investors actually earn depends on the market price at which the shares trade. If the shares are still quoted at or near par (≈ $100), the yield remains essentially the stated 8 %:

[
\text{Yield} = \frac{\$2.00 \times 4}{\text{Market price}} = \frac{\$8.00}{\text{Market price}}.
]

• At $100 → 8 % yield (identical to the coupon).
  
• At $95 → 8 % × ($100/$95) ≈ 8.4 % effective yield.
  
• At $105 → 8 % × ($100/$105) ≈ 7.6 % effective yield.

Trading Implications

Fundamentals: An 8 % cumulative preferred dividend is relatively high in the current low‑rate environment, making Series A attractive for yield‑seeking investors, especially given the cumulative feature that protects against missed payments.

Market dynamics: If the preferred’s price has slipped below par (e.g., $90‑$95) due to broader equity market volatility, the effective yield jumps above 8 %, creating a potential entry point for income‑focused traders. Conversely, a price premium (above $100) compresses the yield, suggesting the market is pricing in higher credit risk or limited liquidity.

Technicals: The preferred‑stock price chart (if available) typically shows limited volatility compared with common equity. Look for a bounce off the $95‑$100 support zone on the weekly chart; a break above $100 with strong volume could signal a shift to a premium pricing regime, reducing the yield and prompting a profit‑take. A sustained test of the $95 support, especially on declining equity market breadth, may present a high‑yield buying opportunity with a stop just below $92.

Actionable take‑away:

- If you’re targeting a > 8 % effective yield, scan for Series A trades below $100 (e.g., $90‑$95) and consider a modest long position, with a stop just under $90.

- If you prefer price stability and lower yield risk, stay on the sidelines until the price stabilizes near par, then capture the 8 % coupon with a “buy‑and‑hold” approach.

Overall, the declared $2.00 quarterly dividend translates directly into an 8 % annual yield at par, but any deviation of the market price from $100 will adjust the effective yield upward or downward, shaping short‑term trading opportunities.