The Attraction of TPG RE Finance Trust’s 6.25% Series C Preferred Stock for Income-Oriented Investors

For income-oriented investors, the allure of preferred stocks often lies in their predictable cash flows, tax efficiency, and structural safeguards. TPG RE Finance Trust’s 6.25% Series C Cumulative Redeemable Preferred Stock (TRTX-C) exemplifies these qualities, offering a compelling blend of dividend consistency, favorable tax treatment, and capital preservation features.

Dividend Consistency: A Pillar of Predictability

TRTX-C has maintained a fixed dividend rate of 6.25% per annum since its issuance in 2021, translating to quarterly payments of $0.3906 per share [2]. This consistency is reinforced by the stock’s cumulative nature, ensuring that unpaid dividends accrue and must be settled before any distributions to common shareholders [3]. For instance, the first dividend was paid on September 30, 2021, covering the period from June 14, 2021, and subsequent payments have adhered to the quarterly schedule without interruption [1]. As of December 31, 2024, the company reported a $0.3906 per share payout, aligning with the 6.25% rate [2]. Such reliability is rare in today’s volatile markets, where many high-yield instruments face refinancing risks or credit downgrades.

Tax Treatment: Ordinary Income with a Twist

While dividends from TRTX-C are classified as ordinary income for U.S. federal tax purposes, they qualify for the 20% deduction under IRC Section 199A for “qualified REIT dividends” [4]. This provision, applicable to real estate investment trusts (REITs), significantly enhances after-tax returns. For example, an investor in the 35% tax bracket would effectively pay 28% on these dividends (35% minus 20%) rather than the full 35% [4]. This tax advantage is critical for income-oriented investors, particularly those in higher tax brackets, as it amplifies the effective yield of the investment.

Capital Preservation: Redemption Rights and Liquidation Preference

TRTX-C includes robust capital preservation mechanisms. The stock is redeemable at $25.00 per share plus accrued dividends on June 14, 2026 [1]. This creates a clear floor for value, especially as the current market price of $18.28 (as of September 8, 2025) trades at a discount to the liquidation preference [5]. Should the company fail to redeem the shares by this date, the cumulative dividend structure ensures that investors retain the right to claim unpaid dividends in full. Furthermore, the preferred stock ranks senior to common equity, providing an additional layer of security [3].

However, the stock’s price volatility—trading as low as $13.00 in recent years—raises questions about its near-term stability [5]. While it has underperformed the S&P 500 ETF (SPY) over the past year, a 4.8% return compared to SPY’s 19.4%, its recent 2-week outperformance (+0.8%) suggests some short-term resilience [5]. Investors must weigh this volatility against the redemption guarantee in 2026, which effectively locks in a minimum value.

Conclusion: A Strategic Case for Income Investors

TPG RE Finance Trust’s Series C Preferred Stock stands out for its combination of fixed income-like stability and equity-like upside. The 6.25% yield, bolstered by tax advantages and a redemption floor, offers a rare balance of income and capital protection. For investors prioritizing predictability in an era of macroeconomic uncertainty, TRTX-C represents a disciplined addition to a diversified portfolio—provided they accept the moderate price risk in exchange for its structural safeguards.

**Source:[1] 424B5 [https://www.sec.gov/Archives/edgar/data/1630472/000119312521186090/d179118d424b5.htm][2] TPG RE Finance Trust, Inc. Reports Operating Results for the Quarter and Full Year Ended December 31, 2024 [https://investors.tpgrefinance.com/news/news-details/2025/TPG-RE-Finance-Trust-Inc.-Reports-Operating-Results-for-the-Quarter-and-Full-Year-Ended-December-31-2024/default.aspx][3] TPG RE Finance Trust, Inc. Announces Tax Treatment of 2024 Dividends [https://investors.tpgrefinance.com/news/news-details/2025/TPG-RE-Finance-Trust-Inc.-Announces-Tax-Treatment-of-2024-Dividends/default.aspx][4] TRTX-C Stock Quote | Price Chart | Volume Chart [https://marketchameleon.com/Overview/TRTX-C/Summary/][5] TRTX - TPG RE Finance Trust, Inc. Stock [https://fintel.io/so/us/trtx]