Costamare Series B Preferred: Steady Dividends in a Volatile Sea

In a market roiled by geopolitical tensions, inflationary pressures, and shifting interest rates, investors seeking predictable income face a stark challenge: how to secure reliable returns without overexposure to volatility. Enter Costamare Inc.'s Series B Preferred Stock (NYSE: CMRE PR B), a fixed-income security offering a 7.625% annual yield with a spotless dividend history since its issuance. This article explores why CMRE PR B stands out as a defensive income-generating asset in turbulent times, backed by the stability of Costamare's maritime operations and the contractual rigor of its preferred shares.

Dividend Consistency: A 7.625% Anchor in Chaos

The cornerstone of CMRE PR B's appeal is its unwavering dividend record. Since its 2013 launch, this preferred stock has delivered $0.476563 per share quarterly, amounting to a 7.625% annual yield (calculated as 7.625% of the $25 liquidation preference divided by four). This consistency is underscored by 13 years of uninterrupted payments, including through the 2020 pandemic and recent rate hikes.

The chart below illustrates the stock's flawless quarterly distribution schedule, with payments consistently hitting the 15th of January, April, July, and October. Even as Costamare's common stock (CMRE) fluctuates, the preferred's dividend remains a fixed pillar of income.

The Cash Flow Engine: A Diversified Maritime Fleet

Costamare's ability to sustain these dividends hinges on its $3.4 billion fleet of 120+ container ships, deployed across major global trade routes. The company's diversified client base—including top-tier carriers like CMA CGM, Hapag-Lloyd, and Maersk—ensures steady demand, even during economic slowdowns.

Key strengths include:
- Contracted Revenue: 85% of 2025 earnings are tied to long-term charters (3–10 years), shielding the company from spot market volatility.
- Sector Resilience: Shipping remains a necessity-driven industry, with demand anchored to global trade volumes. Even in recessions, container lines prioritize contracted tonnage.
- Strong Free Cash Flow: Costamare generated $129 million in free cash flow in 2024, up 18% year-over-year, supporting its dividend commitments.

Cumulative Dividends: A Safety Net for Preferred Holders

What truly sets CMRE PR B apart is its cumulative feature. Unlike common stocks, missed preferred dividends accrue until paid, prioritizing shareholders in lean times. This structure ensures that even if Costamare faces temporary cash constraints, preferred holders come first.

Moreover, the Series B's perpetual structure removes maturity risk; investors need not worry about call dates or refinancing risks common in bonds. While Costamare can redeem shares starting August 2018 at $25 per share plus accrued dividends, there's no indication of such action, as the company prefers to retain capital for fleet upgrades and dividends.

Why Now? A Defensive Play for Income Seekers

In today's environment—where bond yields are volatile and equities face earnings downgrades—CMRE PR B offers three key advantages:
1. Predictable Income: A 7.625% yield in an era where 10-year Treasuries hover around 4.5% is a rare premium.
2. Low Volatility: Preferred stocks typically trade with less sensitivity to equity swings.
3. Inflation Hedge: The shipping sector benefits from rising freight rates tied to global demand, indirectly supporting Costamare's cash flows.

The chart above shows CMRE PR B's price stability versus its common counterpart, which has faced greater volatility due to earnings sensitivity.

Investment Considerations and Risks

Pros:
- Fixed yield in a rising-rate world (though preferreds can drop in value if rates climb further).
- Cumulative dividends provide a “buffer” in tough times.
- Defensive sector exposure to shipping, a global necessity.

Cons/Risks:
- Interest Rate Sensitivity: Rising rates could pressure preferred prices, though CMRE PR B's 7.625% yield offers a cushion.
- Liquidity: Preferred shares trade less frequently than common stock, though CMRE PR B has decent volume.
- Redemption Risk: While unlikely, a potential call could force investors to reinvest at lower rates.

Final Thoughts: A Steady Hand in Stormy Waters

For income-focused investors willing to navigate the nuances of preferred stocks, CMRE PR B is a compelling option. Its 7.625% yield, 13-year dividend track record, and cumulative protections position it as a defensive income machine, particularly in markets where stability is scarce.

Actionable Takeaway:
- Buy: For investors seeking a fixed-income supplement with less volatility than equities.
- Hold: Until interest rates stabilize or the dividend rate changes.
- Avoid: If liquidity is critical, or you prefer shorter-duration instruments.

In a world where predictability is a rare commodity, Costamare's Series B Preferred Stock sails steadily onward.

Data as of June 19, 2025. Past performance does not guarantee future results. Consult your financial advisor before making investment decisions.