Wells Fargo 7.5% Series L (WFC L PFD): trading at $1,180, for a 6.4% current yield.
Bank of America 7.25% Series L (BAC L PFD):, trades around $1,110 and yields 6.55%.
JPMorgan 5.5% Series O (JPM D PFD): trades at $23.85 (face $25), yields 5.80%
largest ETF, iShares S&P U.S. Preferred (PFF): now around $39.50, and yields almost 6%
When Barron's assessed the income-producing area of the stock and bond markets at the start of the year, we ranked preferred stock at the bottom of our list, while dividend-paying stocks were on top. At that time, bank preferred, the dominant part of that market, usually yielded less than 6%. Moreover, most preferred has the unfavorable combination of long or perpetual maturities—meaning keen sensitivity to long-term rates—and a five-year call feature that gave issuers the option to redeem them at face value, usually $25 per share.
Bank preferred yields have gotten better since then, and improving bank profits and balance sheets heighten the security of dividends.
Barron's has highlighted two unusual preferreds that are better than the average bank issue because they carry above-average yields and probably can't be redeemed absent a huge rise in the issuer's common shares.
One is the Wells Fargo 7.5% Series L, now trading at $1,180, for a 6.4% current yield. The other is the Bank of America 7.25% Series L, which trades around $1,110 and yields 6.55%. The face value of both issues is $1,000.
Investors have told Barron's that if Bank of America and Wells Fargo want to redeem these issues, they likely will have to offer investors a redemption option at a premium above current prices. Other options: JPMorgan 5.5% Series O issue now trades at around $23.85, below its face value of $25, and yields 5.80%. The largest ETF is the iShares S&P U.S. Preferred (PFF), now around $39.50, and yielding almost 6%.