How will the announced $0.3515625 per share distribution affect the market price and yield of the NCV Series A cumulative preferred shares?
Impact on price:
When a preferred share goes ex‑distribution the market normally discounts the share by roughly the cash amount that will be paid. The $0.3515625 per‑share quarterly distribution represents the full 4‑quarter payout that makes up the $1.40625 annual rate, so on the ex‑date (Sept 12, 2025) we can expect the NCV PR A price to drop about $0.35 per share, all else equal. The magnitude of the move will be tempered by the stock’s liquidity and any premium/discount to its $25‑par value. If the series is currently trading at a premium (e.g., $27‑$28), the price may fall to the pre‑ex level less the $0.35 payout, tightening the premium but leaving the net yield essentially unchanged. Conversely, if the shares are trading at a discount (e.g., $23‑$24), the ex‑price will sit near the discounted level plus the $0.35 reduction, potentially narrowing the discount and making the shares more attractive to yield‑hungry investors.
Impact on yield:
The announced cash distribution does not change the contractual annual dividend of $1.40625, so the current yield will stay anchored to that figure divided by the post‑ex price. Assuming a pre‑ex market price of $26.00, the pre‑ex yield is 5.40% ($1.40625 ÷ $26). After the $0.35 price drop, the price would be ≈$25.65, raising the yield to about 5.49%—a marginal uptick. If the security is trading at a larger discount, the yield boost will be more pronounced (e.g., $23 price → ~6.11% yield). Hence, the distribution itself is a neutral event for yield; any yield change comes from the price adjustment that follows the ex‑date.
Trading take‑aways:
1. Short‑term: Expect a modest, roughly $0.35, price dip on the ex‑date. Traders can scalp the predictable move by buying just before the ex‑date and selling immediately after, provided liquidity is sufficient.
2. Medium‑term: If the series is at a sizable discount, the post‑ex price may stabilize above the adjusted level as income‑seeking investors step in, creating a potential buying opportunity with a 5.5‑6%+ yield. If it remains at a premium, the yield will be modest and the share may revert toward its fair‑value premium/discount range, so consider short‑positioning if you anticipate a premium contraction.
3. Risk management: Monitor the bid‑ask spread and any concurrent market moves in the broader convertible‑income space; a widening spread can erode the scalping edge, while a broader rally in high‑yield assets can compress discounts and limit upside.