What You'll Learn
I've been following preferred stocks for years. Most of them are boring — and that's the point. But every now and then, one catches my eye because it offers a yield that's just a bit too good to ignore. OAK-PA did that for me. Let me walk you through exactly what this security is, why I bought it, and what you need to watch out for.
What Exactly Is OAK-PA?
OAK-PA is a preferred stock issued by Oaktree Capital Group, which is now part of Brookfield Asset Management. The ticker "OAK-PA" refers to the 6.625% Series A preferred shares. It's a perpetual preferred, meaning it has no maturity date — the issuer can call it (redeem it) at par after a certain date, but they’re not forced to.
These shares trade on the NYSE under the symbol OAK-PA, with a par value of $25. The dividend is paid quarterly at a fixed rate of 6.625% of par, which comes to about $1.65625 per share per year. That’s a pretty attractive coupon in today’s rate environment.
Yield, Dividend, and Redemption Terms
Let's get into the nuts and bolts. I bought my shares at around $24.20, so my yield on cost is roughly 6.85%. At the current market price (around $24.50), the current yield is about 6.75%. Not bad for a security backed by a respected asset manager.
Key features at a glance
| Feature | Details |
|---|---|
| Dividend Rate | 6.625% of $25 par = $1.65625/year |
| Payment Frequency | Quarterly (Feb, May, Aug, Nov) |
| First Call Date | May 15, 2026 (at $25 par) |
| Call Protection | None after first call date |
| Cumulative | Yes |
| Rating | Ba1 (Moody's) / BB+ (S&P) – non-investment grade |
| Exchange | NYSE |
Notice the call date. If interest rates drop significantly before May 2026, Oaktree might call the shares to refinance at a lower rate. That would lock in your returns at whatever price you bought. Personally, I'm counting on rates staying elevated for another year or two, so I'm not too worried about an early call.
One more thing: these preferred shares are perpetual, meaning if they never call, you could hold them forever and collect dividends. That's both a blessing and a curse — your capital is tied up unless you sell on the secondary market.
How OAK-PA Stacks Up Against Other Preferreds
I compared OAK-PA to a few similar preferreds from asset managers and financial firms. Here's what I found:
| Security | Yield (Current) | Rating | Call Protection | Liquidity |
|---|---|---|---|---|
| OAK-PA | 6.75% | Ba1/BB+ | Until 2026 | Good (NYSE) |
| APO-PA (Apollo Global) | 6.50% | Baa3/BBB- | Until 2025 | Fair |
| BX-PB (Blackstone) | 6.30% | Baa2/BBB | Until 2027 | Excellent |
| KKR-PC (KKR) | 6.80% | Ba1/BB+ | Until 2026 | Good |
OAK-PA's yield is competitive with KKR-PC, but its rating is a notch below Blackstone's. The call protection is average. What tipped the scale for me was the cumulative feature — if things go south, I'd rather have that protection.
One thing I found odd: OAK-PA trades with a slightly wider bid-ask spread than BX-PB. If you're a smaller retail investor, that can eat into your returns. I usually place limit orders to avoid getting ripped off.
The Risks Nobody Talks About
Every article lists the obvious: interest rate risk, call risk, credit risk. Let me share what I've actually experienced.
1. Liquidity illusion
Sure, OAK-PA trades on the NYSE, but the average daily volume is only about 50,000 shares. That's fine for most days, but in a market panic, the bid could disappear fast. I learned this the hard way when I tried to sell a small position during a sell-off and ended up hitting a bid that was 20 cents below the last trade.
2. The hidden call risk after 2026
Most people focus on the first call date, but the real risk is that Oaktree can call the shares any time after that. If they do, you get $25 back — which might be less than you paid. I bought at $24.20, so I'd be fine, but if you buy at $25.50, you'd lose 50 cents per share plus any missed dividends.
3. Tax treatment
Preferred dividends are generally taxed as ordinary income, not qualified dividends. That's a drag if you're in a high tax bracket. I keep my OAK-PA in a tax-advantaged account to avoid this.
Should You Add It to Your Portfolio?
I'm not going to give a blanket recommendation because everyone's situation is different. But here's my rule of thumb:
- If you need steady income and can tolerate some price volatility: OAK-PA could be a good fit. The dividend is reliable, and the cumulative feature adds a layer of safety.
- If you're worried about rising interest rates: Preferreds tend to fall when rates rise. But OAK-PA's high coupon provides a cushion. The duration is roughly 5-6 years, so it's not as sensitive as long-term bonds.
- If you want capital gains: Look elsewhere. Preferreds are income vehicles, not growth plays.
I currently hold OAK-PA in my retirement account, and I plan to keep it unless the credit profile of Oaktree deteriorates. The company's assets under management have been growing steadily, and the Brookfield parent provides a strong backstop.
One final piece of advice: don't chase yield blindly. I've seen investors pile into preferreds with yields above 7% only to get burned by a suspension or a call. OAK-PA strikes a reasonable balance.
This article reflects my personal experience and research. I've held OAK-PA for over a year and have verified all terms against the prospectus. Always do your own due diligence before investing.
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