Intrinsic Value Cohen & Steers Select Preferred and Income Fund, Inc. (PSF)

• Previous Close: $20.54
• Intrinsic Value: $101.51
• Upside potential: +394%

Stock Valuation Context

Business Model And Market Position

Cohen & Steers Select Preferred and Income Fund, Inc. (PSF) is a closed-end investment fund specializing in preferred securities and income-generating assets. The fund primarily invests in a diversified portfolio of preferred stocks, hybrid securities, and corporate debt instruments, targeting institutional and retail investors seeking stable income with lower volatility. PSF operates within the broader fixed-income market, leveraging Cohen & Steers' expertise in real assets and income strategies to deliver competitive risk-adjusted returns. The fund's market position is reinforced by its focus on high-quality, liquid preferred securities, which are often issued by financial institutions and large corporations. This niche allows PSF to capitalize on yield advantages over traditional bonds while maintaining a defensive posture in volatile markets. The fund's active management approach differentiates it from passive ETFs, offering potential alpha through security selection and sector rotation.

Revenue Profitability And Efficiency

For FY 2024, PSF reported revenue of $32.99 million, with net income reaching $32.42 million, reflecting strong profitability. The fund's diluted EPS stood at $2.69, indicating efficient income generation relative to its share count. Operating cash flow of $17.93 million suggests robust liquidity management, while zero capital expenditures highlight the fund's asset-light structure. These metrics underscore PSF's ability to convert investment income into shareholder returns effectively.

Earnings Power And Capital Efficiency

PSF demonstrates solid earnings power, with net income closely tracking revenue, indicating minimal overhead costs. The absence of debt enhances capital efficiency, allowing the fund to allocate nearly all investment income to dividends or reinvestment. The $1.512 dividend per share reflects a high payout ratio, typical of income-focused funds, and underscores PSF's commitment to delivering consistent cash yields to shareholders.

Balance Sheet And Financial Health

PSF maintains a conservative balance sheet, with no debt and $107,431 in cash and equivalents. The fund's financial health is further supported by its closed-end structure, which provides stable capital for long-term investments. The lack of leverage reduces downside risk during market stress, aligning with the fund's income preservation mandate.

Growth Trends And Dividend Policy

PSF's growth is tied to the performance of preferred securities markets, with income stability being a key focus. The fund's dividend policy prioritizes consistent payouts, as evidenced by the $1.512 annual dividend per share. While capital appreciation is secondary, the fund may benefit from refinancing activity in the preferred market or shifts in interest rate expectations.

Valuation And Market Expectations

PSF's valuation is primarily driven by its NAV and yield profile relative to comparable fixed-income funds. Market expectations likely center on the fund's ability to maintain its dividend amid interest rate fluctuations. The absence of debt and focus on high-quality issuers may position PSF as a lower-risk option within the preferred securities universe.

Strategic Advantages And Outlook

PSF's strategic advantages include Cohen & Steers' specialized credit research and the fund's pure-play exposure to preferred securities. The outlook depends on interest rate trends and credit spreads, but the fund's active management and sector focus provide flexibility to adapt. Investors may value PSF for its income consistency and defensive positioning in uncertain rate environments.

Sources

Fund annual report, SEC filings