Preferred Picks

Depending on your views of the market and broader economy as a whole, you might be considering non-equity options right now. I maintain a ‘screener’ of about 40 preferred shares that I keep an eye on. Here is a quick update on a few of my current picks.

Wells Fargo Preferred ‘P’ (WFC-P) has 5.25% coupon rate, issued at $25 a share. It is currently trading for about an 8.4% discount at $22.90 a share, which gives it an effective return of 5.73%. Wells Fargo currently carries a BBB+ rating from S&P’s.

JPMorgan Chase Preferred ‘D’ (JPM-D) has a 5.50% coupon rate, issued at $25 a share. It is currently trading for about an 8.3% discount at $22.92 a share, which gives it an effective return of 6.00%. JPMorgan carries a BBB rating from S&P’s.

Barclays Bank Preferred ‘C’ (BCS-C) has a 7.75% coupon rate, issued at $25 a share. It is currently trading at about a 3% premium at $25.74 a share, which gives it an effective return of 7.53%. There are very few preferred with a yield this high, at such a small premium. Barclays is only carrying a BB rating. S&P defines the BB rating as below:

‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.