ATAX, America First Multifamily Investors LP, holds mortgage revenue bonds in majority multifamily apartments and student housing. They hold the first lien on these buildings which means they are the first to be able to foreclose if the landlord cannot make payment. The company has been around for almost half a century and have been consistently paying dividends every quarter. They are a very conservative company with a very experienced team.
With the covid-19, there stock has had a dramatic drop from being over $8 to now being under $5. Since they offer a $0.50 per year dividend, you are getting over a 10% dividend at today’s levels. It’s rare to see the current price being below $5. Each time that it fell below $5 per share the stock ripped back upwards. For the long-term buy and hold investor, you are getting a nice 10% dividend that is majority backed by tax-free income.
That means if you have a federal income tax at 32% you still do not pay any taxes for the dividend that comes out of ATAX. They are able to do this by investing in low-income housing which gets tax benefits. Of course, not all their income is tax free, but they will do their best to make sure it is tax exempt.
With an experienced team in place and first lien holders to housing, America Family Multifamily Investors is a great long term investment. Even for those looking for appreciation, there is plenty of upside in this investment. I expect the price to spike upwards with the after stock market earnings call later today.
Actually the income is tax deferrred. When you sell it you have to do a cost basis adjustment where you subtract your tax free interest from your purchase price which would eventually be a capital gains tax. And once you get back 100% of price paid in interest it starts getting taxed at 15% . Tax deferred is not tax free when you go to sell it.