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Preferred Stocks to Buy: CubeSmart Series A

preferred-stocks-cubesmartCurrent Dividend Yield: 7.3%

Then there’s CubeSmart (CUBE), a public storage real estate investment trust (REIT).

I’m listing this even though CubeSmart has some serious challenges — most noticeably to me, CubeSmart is running free cash flow-negative. And its CubeSmart’s 7.75% Series A shares trade about 5% above par, which is a little high.

On the flip side, CubeSmart is experiencing strong growth in some big markets. Overall, in Q4, the company saw a 6.7% year-over-year improvement in revenues. The Philadelphia/South Jersey portfolio saw a 9.8% revenue increase, with Austin/Houston increasing 8.8%.

This is a perfect example of a company where you need to evaluate your risk carefully. I think you’re safe with the Series A shares, but it doesn’t mean you shouldn’t keep monitoring CubeSmart down the road.

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