Adamas Trust Series G Preferreds and Their 9.7% Yield Attractiveness

In an era of persistently low economic growth and central banks’ constrained policy tools, income-focused investors are increasingly turning to high-yield preferred stocks as a source of returns. Among these, Adamas Trust Series G Cumulative Redeemable Preferred Stock (ADAMZ) has emerged as a compelling, albeit complex, proposition. With a current yield of 9.7% and a market price of $18.05—trading at a 27.24% discount to its $25 liquidation preference—ADAMZ offers a tantalizing combination of income and potential capital appreciation. Yet, its attractiveness must be weighed against structural risks, including limited credit ratings transparency and the broader fragility of the private credit market.

The Yield and Discount Dynamics

ADAMZ’s 9.7% yield is derived from its fixed 7.00% annual dividend on a $25 liquidation preference, translating to a quarterly payout of $0.4375 per share. At its current price, this generates a yield that far exceeds the average for preferred stocks, particularly in a low-growth environment where safer alternatives like Treasuries offer negligible returns [1]. The discount to liquidation preference reflects market skepticism about the issuer’s creditworthiness, but it also creates a built-in margin of safety for investors willing to hold the security to maturity.

The recent ex-dividend date of July 1, 2025, with a payout on July 15, underscores the stock’s regularity in dividend distribution, though historical data remains sparse. This opacity is a red flag: while the company has maintained its dividend schedule in recent quarters, the absence of a longer track record complicates assessments of its reliability [5].

Credit Risk: A Mixed Picture

The most pressing concern for income investors is credit risk. Moody’s Investors Service has assigned ADAMZ an A2 rating, indicating a “strong capacity to meet financial commitments” but also signaling that the security is not investment-grade in the strictest sense [2]. However, S&P and Fitch have not publicly disclosed ratings for ADAMZ as of September 2025, leaving a critical gap in the risk assessment. This absence is notable given the broader private credit market’s vulnerabilities, including high borrower leverage and opaque valuation practices [3].

The issuer, Adamas Trust, Inc. (formerly New York Mortgage Trust, Inc.), has taken steps to bolster its balance sheet. In Q2 2025, it acquired $2.1 billion in residential assets and issued $90 million in 9.875% Senior Notes due 2030, signaling confidence in its capital structure [5]. Yet, the same quarter saw a net loss of $3.486 million, driven by a challenging interest rate environment and elevated loan acquisition costs. While earnings available for distribution reached $20.024 million, this figure masks the volatility inherent in mortgage-related credit assets [5].

Strategic Rebranding and Market Position

The company’s rebranding to Adamas Trust, Inc. in September 2025 reflects a strategic pivot toward long-term resilience. This includes the acquisition of Constructive Loans, LLC, a business purpose loan provider, which diversifies its revenue streams and aligns with the growing demand for non-traditional real estate financing [4]. Such moves could enhance creditworthiness over time, but their impact on ratings agencies’ assessments remains untested.

The preferred stock’s structure—cumulative and redeemable—adds another layer of complexity. Cumulative dividends ensure that unpaid amounts accrue, reducing the risk of a dividend cut. However, the issuer’s ability to redeem the shares at $25 per share introduces call risk, particularly if interest rates decline and the company seeks to refinance at lower costs.

Macroeconomic and Sector-Specific Risks

The broader macroeconomic context cannot be ignored. The private credit market, now a $1.3 trillion sector, faces its first major stress test as inflationary pressures persist and policy uncertainties—such as potential tariff hikes—loom [3]. For ADAMZ, this means heightened sensitivity to borrower defaults and valuation mark-downs, particularly in its residential loan portfolio.

Moreover, the yield’s attractiveness is contingent on the assumption that the discount to liquidation preference will narrow. This requires confidence in the issuer’s ability to stabilize its financial performance and in the market’s willingness to reward its risk profile.

Conclusion: A High-Risk, High-Reward Proposition

ADAMZ’s 9.7% yield is undeniably alluring, particularly for investors seeking income in a low-growth world. However, its valuation reflects a market that demands a premium for credit risk. The lack of S&P and Fitch ratings, combined with the issuer’s recent financial mixed results, necessitates a cautious approach. For those who can tolerate the risks—credit, interest rate, and liquidity—ADAMZ offers a compelling opportunity to generate income while potentially benefiting from a narrowing discount. Yet, it is not a security for the faint of heart. In the end, the decision to invest hinges on a careful balancing of yield hunger against the realities of a fragile macroeconomic backdrop.

Source:
[1] Adamas Trust Inc | 7.00% Series G Cumulative Redeemable Preferred Stock (NYMTZ) [https://www.preferredstockchannel.com/symbol/?a=detailed&ticker=NYMTZ]
[2] Washington, DC 20549 [https://www.sec.gov/Archives/edgar/data/1503290/000110465922002768/tm2128146d1_ncsr.htm]
[3] The Trillion-Dollar Private Credit Market Faces Its First Big Test [https://www.institutionalinvestor.com/article/trillion-dollar-private-credit-market-faces-its-first-big-test]
[4] New York Mortgage Trust, Inc. Announces Corporate Rebrand to Adamas Trust, Inc. [https://www.barchart.com/story/news/34539740/new-york-mortgage-trust-inc-announces-corporate-rebrand-to-adamas-trust-inc]
[5] New York Mortgage Trust Reports Second Quarter 2025 Results [https://www.nymtrust.com/news/2025/30-07-2025-210816370]