Volatile Earnings? Find Stability in Preferreds

Earnings season is in full swing, and so is volatility. A small earnings miss, cautious guidance, or even negative commentary from a competitor can send common shares swinging sharply. For many investors, each quarter feels like a roller coaster.

Fixed income, especially baby bonds and preferred shares, works differently. Their value is driven by balance sheet strength, liquidity, long-term profitability, and prevailing interest rates, not by quarterly headline surprises. While common shares react to noise, preferred investors collect income that is contractual, cumulative, and senior in the capital structure. That makes them a stabilizing force in an income portfolio.

One risk with preferreds and baby bonds is redemption. When a security gets called, the income stream ends. But with a diversified fixed-income portfolio, like the one we maintain at High Dividend Opportunities, redemption risk becomes an opportunity, as the returned capital can be redeployed into new income ideas. A well-built fixed-income allocation is one of the best defenses against market volatility and interest rate uncertainty.

Recently, we celebrated the full redemption of two long-term fixed-income holdings:

• Ladenburg Thalmann 7.00% Notes due 5/31/2028 (LTSF) — +70% total return since January 2021, redeemed Feb 7, 2026.

• SiriusPoint Ltd. 8.0% Series B Preferred (SPNT-B) — +40% total return since October 2022, redeemed February 26, 2026.

Both generated steady income and meaningful capital gains due to disciplined purchases at discounted prices.

So what are we buying today?

We’ve recently added two preferreds and one bond to our portfolio, with another high-quality baby bond coming this weekend. Join us to receive our Buy Alerts before the market fully prices them in.

With rate cuts potentially ahead, this is an environment where locking in strong yields can position investors for both income and upside. Here are some fixed-income picks for steady income through the noise.

1. CIM Baby Bonds & Preferreds – Up To 10.1% Yields

   
   

Chimera Investment Corporation (CIM) is an internally managed mortgage REIT that invests and manages a diversified portfolio of mortgage assets. CIM reported a 20% YoY increase in total assets as of December 2025, to $15.8 billion.

Throughout 2025, CIM has been disposing of riskier assets and accumulating Agency MBS, MSRs, and expanding their investment management and advisory services segments. The acquisition of Palisades Advisory Services accelerates this business, creating a capital-light revenue stream that is not dependent on interest rate spreads or the company's own balance sheet. CIM is also bringing mortgage originations in-house, with its recent acquisition of HomeXpress. These meaningful transformations resulted in earnings and book value growth, resulting in the mREIT’s recent 21% dividend increase.

We like CIM baby bonds and preferreds, with CIMO offering a 9.1% yield (9.250% Senior Notes due 8/15/2029), and CIM-B (Series B, Fixed-to-Floating Rate, Cumulative Redeemable Perpetual Preferred Shares), yielding 10.1%

2. ADAM Baby Bonds & Preferreds – Yields of up to 10.2%

   
   

Adamas Trust (ADAM) is an internally managed real estate investment trust that focuses on single-family and multi-family residential credit assets. In recent years, like CIM, ADAM has been making portfolio changes to reposition the mREIT toward lower-risk, higher-liquidity assets like Agency MBS.

In addition to rising exposure to Agency MBS, in recent years, ADAM has maintained consistency in Earnings Available for Distribution, Adj. EPS growth, and delivered a dividend increase last year.

We like ADAM baby bonds and preferreds for lower risk and higher positioning in the mREIT’s capital structure. Floating-rate Series E Cumulative Redeemable Preferred Stock (ADAMM) offers a 10.2% yield that varies quarterly based on prevailing rates with a high base coupon, while 9.875% Senior Notes due 10/1/2030 (ADAMH) offers a fixed 9.7% yield until redemption.

Conclusion

Locking in high, contractual income today allows us to stay calm through earnings noise and market volatility. You can grab the popcorn and watch the drama unfold, knowing your next paycheck is right around the corner.

By positioning higher in the capital stack, we collect dependable cash flow while preserving upside potential. This is the power of our Income Method, at High Dividend Opportunities.