Is Fundamental Global's 8% Preferred Dividend a Safe Haven in Volatile Markets?

In a world of market volatility and uncertain returns, income investors often seek stability amid chaos. Fundamental Global Inc.’s 8.00% Cumulative Preferred Stock (FGFPP) stands out as a contrarian opportunity, offering a 12.1% dividend yield as of May 2025—a figure that doubles the S&P 500’s average yield—while trading at a discount to its par value. For those prioritizing cash flow over growth, FGFPP’s unique combination of dividend security, insider buying signals, and preferred stock advantages could make it a rare safe haven in turbulent markets. Let’s dissect why this instrument deserves a place in income-focused portfolios.

The Dividend: A Steady Anchor in a Shifting Landscape

FGFPP’s $2.00 annual dividend (equivalent to an 8% coupon rate at its $25 par value) is paid quarterly in cash, with the most recent $0.50-per-share payout announced for June 2025. While the stock trades at a $16.50 discount to par, this creates a 12.1% yield—a compelling premium for investors seeking income. The key distinction here is the cumulative feature: if dividends are skipped, they accrue and must be paid before common shareholders receive anything. This structure acts as a financial backstop, making FGFPP’s preferred dividends more secure than common stock dividends in a downturn.

Contrarian Signals: Insiders Buy While Institutions Sell

While institutional investors like EverStar Asset Management and Vanguard reduced their holdings in Q4 2024, insiders are doubling down. GLOBAL GP, LLC FUNDAMENTAL, a key insider, has purchased 30,000 shares (totaling ~$660,000) over the past six months, signaling confidence in FGFPP’s ability to sustain its dividend. This divergence between insider buying and institutional selling creates a contrarian sweet spot: a low-cost entry point into a high-yield instrument backed by internal stakeholders.

Preferred Stock Priority: A Fortress in Crisis

As a preferred shareholder, you stand ahead of common equity holders in both dividend distributions and liquidation. In a stressed scenario—such as a drop in reinsurance or asset management revenues—FGFPP’s preferred stockholders are legally entitled to their dividends before common shareholders see a penny. This hierarchy is particularly valuable in an economy where credit risks and global instability loom large.

Risks: Navigating the Storm

Critics will point to FGFPP’s lagging stock performance—its 5-year return of 10.52% pales against the S&P 500’s 108.74%—and institutional sell-offs as red flags. The company also faces operational risks tied to its reinsurance and merchant banking divisions, which could strain cash flow. Yet, these risks are already priced into the stock’s depressed valuation. The dividend, meanwhile, remains uninterrupted for over two years, and the cumulative clause ensures back payments if issues arise.

The Contrarian Play: Income Over Growth

For investors focused on cash flow, FGFPP’s 12.1% yield is a lifeline in an era of low interest rates and market whiplash. The preferred stock’s fixed dividend structure acts as a hedge against volatility, while insider buying and the cumulative feature reduce downside risk. Even if macroeconomic headwinds pressure the stock price further, the $2.00 annual payout remains contractual—making it a high-yield bond alternative with equity upside.

Final Verdict: Dive In—But Tread Cautiously

FGFPP is not without risks, but for income investors willing to embrace contrarian strategies, it offers unmatched yield stability in a shaky market. Pair this with a dividend reinvestment strategy to compound returns, and FGFPP could anchor a portfolio through uncertainty. Act now before the yield contracts as the market catches on.

Investment thesis: Buy FGFPP for its 12.1% dividend yield, insider confidence, and preferred stock protections. Hold for income and ride the contrarian wave.

This article synthesizes data from Fundamental Global’s May 2025 press release and market analysis, emphasizing FGFPP’s role as a high-yield, low-risk income play for contrarian investors.