Summary
- DiamondRock Hospitality’s preferred shares offer a 7.2% total return if called in 2025, with a 6.2% annualized return.
- The REIT’s solid performance and balance sheet strength indicate a stable preferred dividend coverage.
- Consider investing in DiamondRock’s preferred shares as a short-term option with potential for a 6.2% annualized yield.
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Introduction
I like preferred shares as a subdivision of my income portfolio, and my main focus is obviously on the issuer’s ability to pay the preferred dividends while the balance sheet strength also plays an important role. The REIT’s management team also calls value creation its ‘magnetic north’, and that definitely is an attitude I like to see.
I have been keeping an eye on DiamondRock Hospitality’s (NYSE:DRH) preferred shares and I used to have a long position which I sold when the preferred shares were trading above par. The preferred shares are still trading above par, so in this article I will have a closer look to check if it would make sense to re-establish a long position.
