Monthly income preferred stock
Monthly income preferred stock or MIPS is a hybrid security created by Eli Jacobson, a Sullivan & Cromwell tax partner, and introduced to the market by Goldman Sachs in 1993. In essence, MIPS is a combination of deeply subordinated debt and preferred stock.
MIPS is structured in such a way as to make payments on the security an interest expense for the borrower and dividend for the lender. A special purpose entity of the issuer sells the preferred stock to the public and then lends the proceeds to the parent. The parent's interest payments to the subsidiary are tax deductible as interest and are used by the SPE to pay preferred dividends to the investors. However, the interest income received by the SPE is not taxable income, because it is organized as a tax-free entity.
Because of these features, MIPS at one point dominated the market for traditional perpetual preferred equity, accounting for over 70% of all new preferred issues. However, MIPS as a tax shelter no longer works. The credit rating agencies consider MIPS to be preferred stock.
- Realty Income Declares Monthly Income Preferred Stock Dividends
- Popular, Inc. - Noncumulative Monthly Income Preferred Stock 2003 Series A
- Traditional And Synthetic Preferreds Provide More Choices For Individual Investor
Stock market Types of stocks Participants Exchanges Stock valuation Financial ratios Trading theories
and strategiesAlgorithmic trading · Buy and hold · Contrarian investing · Day trading · Efficient-market hypothesis · Fundamental analysis · Market timing · Modern portfolio theory · Momentum investing · Mosaic theory · Pairs trade · Post-modern portfolio theory · Random walk hypothesis · Style investing · Swing trading · Technical analysis · Trend following
Related termsBlock trade · Cross listing · Dark liquidity · Dividend · Dual-listed company · DuPont Model · Flight-to-quality · Haircut · IPO · Margin · Market anomaly · Market capitalization · Market depth · Market manipulation · Market trend · Mean reversion · Momentum · Open outcry · Public float · Rally · Reverse stock split · Share capital · Short selling · Slippage · Speculation · Stock dilution · Stock split · Trade · Uptick rule · Volatility · Voting interest · Stock market index Corporate finance and investment banking Capital structure Transactions
(terms / conditions)
ValuationFinancial modeling · Free cash flow · Business valuation · Fairness opinion · Stock valuation · APV · DCF · Net present value (NPV) · Cost of capital (Weighted average) · Comparable company analysis · Accretion/dilution analysis · Enterprise value · Tax shield · Minority interest · Associate company · EVA · MVA · Terminal value · Real options valuation List of investment banks · List of finance topics
Wikimedia Foundation. 2010.
Look at other dictionaries:
Monthly income preferred security (MIP) — Preferred stock issued by a subsidiary located in a tax haven. The subsidiary relends the money to the parent. The New York Times Financial Glossary … Financial and business terms
Monthly Income Preferred Securities - MIPS — Shares that are an interest in a limited partnership existing solely for the purpose of issuing preferred securities and lending the proceeds of the sales to its parent company. MIPS usually have a $25 par value, NYSE listing and cumulative… … Investment dictionary
monthly income preferred security — ( MIP) preferred stock issued by a subsidiary located in a tax haven. The subsidiary relends the money to the parent company. Bloomberg Financial Dictionary … Financial and business terms
Preferred stock — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond … Wikipedia
Stock market — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond … Wikipedia
Income Fund — A type of mutual fund that emphasizes current income, either on a monthly or quarterly basis, as opposed to capital appreciation. Such funds hold a variety of government, municipal and corporate debt obligations, preferred stock, money market… … Investment dictionary
Income trust — An income trust is an investment trust that holds income producing assets. The term also designates a legal entity, capital structure and ownership vehicle for certain assets or businesses. Its shares or trust units are traded on securities… … Wikipedia
Companies listed on the Toronto Stock Exchange (C) — Toronto Stock Exchange listed stocks: 0 9 A B C D E F G H I J K L M N O P Q R S T U V W … Wikipedia
Companies listed on the Toronto Stock Exchange (B) — Toronto Stock Exchange listed stocks: 0 9 A B C D E F G H I J K L M N O P Q R S T U V W … Wikipedia
Companies listed on the Toronto Stock Exchange (I) — Toronto Stock Exchange listed stocks: 0 9 A B C D E F G H I J K L M N O P Q R S T U V W … Wikipedia