Global Partners LP Preferred Units: A High-Yield Gamble with a 2026 Deadline

The energy sector has always been a land of high risk and high reward, but rarely do you find a security offering a 9.19% yield while trading at a 3.4% premium to its liquidation value. That's exactly what Global Partners LP's Series B Preferred Units (GLP.PRB) are doing right now. However, this opportunity comes with an expiration date: May 15, 2026, when the company can redeem the units at $25 per share—erasing that premium. Let's dissect whether this is a buy, a hold, or a “sell before the clock runs out” proposition.

The Dividend: Reliable, but with Strings Attached

GLP.PRB's cumulative dividend feature is its crown jewel. Unlike non-cumulative preferreds, missed payments here must be made up before common shareholders see a dime. The 9.5% annual dividend ($2.375 per unit) has been paid consistently since May 2021, with quarterly distributions of $0.59375 hitting accounts like clockwork.

But there's a catch: the payout ratio is 92% of Global Partners' EBITDA, according to the research. That's tight, but the company's terminal network and fuel distribution business provide stable cash flows, even in volatile energy markets. As long as Global Partners avoids major disruptions, this dividend should hold.

Valuation: The Premium Puzzle

Trading at $25.85, GLP.PRB is priced at a 3.4% premium to its $25 liquidation preference. Why? Investors are betting the company won't call the units in 2026—or that the premium will stay intact. But here's the math: If Global Partners redeems at $25 on May 15, 2026, holders lose the $0.85 premium. However, they'll still pocket the 9.5% dividend until then.

The 9.19% current yield (based on the $25.85 price) is a steal compared to 10-year Treasuries yielding around 4.5%. But this premium isn't free: it's a bet on Global Partners delaying the call.

The Call Date Catalyst: A Double-Edged Sword

The May 15, 2026 call date is the biggest wildcard. Will the company choose to retire these high-cost preferred units? The research suggests yes—if its finances improve.

Global Partners' debt-to-equity ratio is projected to drop below 3.0x by late 2025, down from 3.5x in 2024. Lower leverage and extended debt maturities could give management the confidence to refinance cheaper and call GLP.PRB.

If the call is imminent, the price could drop toward $25, wiping out the premium. But if investors sell before the call, they might lock in gains from the dividend plus a partial premium.

Risks: Interest Rates and Debt Dynamics

The energy sector's volatility isn't the only threat. Rising interest rates could depress preferred stock prices broadly, as investors demand higher yields. GLP.PRB's lack of a maturity date (it's perpetual unless called) makes it extra sensitive to rate hikes.

Meanwhile, Global Partners' $1.87 billion market cap and minimal ETF ownership (0.13%) mean this security is thinly traded. Liquidity could dry up as the call date nears, making it harder to exit positions.

The Bottom Line: A High-Yield Hail Mary

GLP.PRB isn't for the faint of heart, but it's a compelling play for income hunters who can stomach the risks. Here's how to approach it:

1. Buy Now for the Dividend: The 9.19% yield is a steal for energy exposure. Hold until at least August 2025 to collect the next distribution (ex-dividend August 1).
2. Watch the Call Clues: Monitor Global Partners' debt reductions and any public hints about refinancing. A drop in the premium toward $25 could signal a call is coming.
3. Sell Before the Clock Ticks Zero: If the call seems likely, sell by early 2026 to preserve some premium. If they don't call, you're locked into a 9.5% yield indefinitely.

This security is a high-wire act between yield and risk. For those willing to play it smart, GLP.PRB offers a rare chance to earn nearly double the market's returns—as long as you don't miss the exit.

In the end, Global Partners' preferred units are like a time-limited lottery ticket. The prize? A 9.19% payout and a shot at energy sector exposure. The risk? Losing that premium if the company calls your ticket in. Roll the dice—but know when to walk away.