LXP Industrial Trust's Preferred Stock: A Secure High-Yield Bet in a Logistics Boom

The hunt for high-yield investments in today's low-interest-rate environment has led many investors to preferred stocks, and few currently stand out as much as LXP Industrial Trust's Series D Cumulative Redeemable Preferred Stock (LXP.PRD). With a 7.55% coupon rate and a dividend yield of 6.7% as of July 2025, this security offers a compelling income opportunity—particularly for those seeking stability in the logistics-driven industrial real estate sector. Let's unpack why LXP.PRD is worth considering.

The Dividend: High, Stable, and Cumulative

LXP.PRD's $0.135 quarterly dividend (annualized to $0.54) translates to a 6.7% yield based on its recent trading price of $8.17. While this is slightly below its $25 liquidation preference, the discount creates a yield premium over the coupon rate, rewarding investors for taking on the risk of price volatility.

The stock's yield handily beats the 3.8% yield on 10-year Treasuries, making it a standout in a landscape where safe income is scarce. What's more, the dividend is cumulative, meaning missed payments must be made up before any dividends can be paid to common shareholders. This feature acts as a safety net in uncertain times.

Why LXP Industrial Trust's Real Estate Fundamentals Matter

LXP focuses on logistics-driven industrial properties, a sector booming due to e-commerce growth, supply chain reshoring, and the rise of just-in-time inventory systems. Over 85% of LXP's portfolio is located in top-tier U.S. markets like California, Texas, and the Southeast, where demand for warehouse space remains robust.

The company's occupancy rate of 96% (as of Q1 2025) and 9.2% annual rent growth underscore the sector's strength. With limited new supply in key markets and rising tenant retention, LXP is well-positioned to sustain its dividend.

Call Protection and Downside Safeguards

While LXP.PRD's call date (February 14, 2012) has long passed, investors need not fear immediate redemption. The stock trades at a steep discount to its $25 liquidation preference, and LXP has no incentive to buy back shares at today's prices. Even if rates rise modestly, the preferred's floating-rate reset clause (triggered after 2024) ensures dividends remain competitive.

Moreover, the cumulative feature adds a layer of protection. If dividends were ever suspended—a scenario made unlikely by LXP's 83% earnings coverage ratio—investors would still be owed the missed payments.

Why Now? The Case for Income in a Volatile Market

With the Federal Reserve pausing rate hikes and the economy navigating a soft landing, preferred stocks like LXP.PRD offer a stable income floor. Their fixed dividends act as a hedge against equity market volatility while providing yields that Treasury bonds can't match.

The stock's price swings—between $8.18 and $8.56 in July—highlight its sensitivity to broader market trends, but its dividend remains rock-solid. For income-focused investors willing to ride out short-term volatility, this is a buy-and-hold candidate.

Risks to Consider

• Interest Rate Risk: A sudden spike in rates could pressure the stock's price further.
• Economic Downturn: A recession could weaken industrial demand, though LXP's long-term leases provide some insulation.
• Dividend Cut Risk: While unlikely given current coverage ratios, no dividend is ever guaranteed.

Final Verdict: A Strategic High-Yield Play

LXP.PRD checks the boxes for income investors: a 6.7% yield, cumulative dividends, and exposure to a high-growth industrial sector. The stock's call date is in the rearview mirror, removing that overhang, while its discount to liquidation value offers downside protection.

In a world where 10-year Treasuries offer 3.8%, LXP.PRD's yield is a no-brainer for those prioritizing income. Pair this with LXP's dominant logistics portfolio, and you've got a rare combination of yield, stability, and growth exposure.

Action Item: For investors seeking to boost portfolio income without chasing high-risk stocks, LXP.PRD deserves a spot in the watchlist. Monitor its next dividend announcement (due August 15, 2025) for any surprises, but the fundamentals remain firmly in its favor.