Chatham Lodging Trust: I’m Still Buying the 8.1% Preferred Yield
Chatham Lodging Trust (NYSE:CLDT) is a real estate investment trust that owns a portfolio of 138 hotels across the United States. The company has been in business for over 20 years and has a proven track record of success. CLDT’s stock has been under pressure in recent months due to concerns about the impact of the COVID-19 pandemic on the hotel industry. However, I believe that the company’s long-term prospects are still bright and that its 8.1% preferred yield is still an attractive investment.
Investment Thesis
Here are a few reasons why I’m still buying CLDT’s preferred stock:
- Strong balance sheet: CLDT has a strong balance sheet with low levels of debt. This gives the company the financial flexibility to weather the current storm.
- Proven track record: CLDT has been in business for over 20 years and has a proven track record of success. The company has consistently generated strong cash flow and has a history of paying dividends.
- Attractive valuation: CLDT’s preferred stock is currently trading at a discount to its par value. This provides investors with an opportunity to lock in a high yield with a margin of safety.
Risks
Of course, no investment is without risk. Here are a few risks to consider before investing in CLDT’s preferred stock:
- Impact of COVID-19: The COVID-19 pandemic has had a significant impact on the hotel industry. CLDT’s earnings have been hurt by the decline in travel. However, I believe that the company’s strong balance sheet and long-term prospects will allow it to weather the current storm.
- Interest rate risk: CLDT’s preferred stock is a fixed-income security. This means that its value could decline if interest rates rise. However, I believe that the company’s strong financial position and long-term prospects make it a relatively low-risk investment.
Conclusion
I believe that Chatham Lodging Trust’s 8.1% preferred yield is still an attractive investment. The company has a strong balance sheet, a proven track record, and an attractive valuation. While there are some risks to consider, I believe that the company’s long-term prospects are still bright. I’m still buying CLDT’s preferred stock.
Kind regards
S. Sing
