JPM - JPMorgan Chase: Higher Rate Preferred Shares With Marginal Risk Compared To CDs

2024-06-23 21:27:35 ET

Summary

• JPMorgan Chase recently announced premature redemption on 5.5% and higher yielding short-term CDs.
• JPMorgan Chase's acquisition of First Republic Bank led to loan growth, but the bank surprisingly has struggled with deposits.
• Series DD and Series EE preferred shares offer attractive income investments at 5.75% and near 6% yield.

Introduction

Last fall, interest rates began a notable climb and equity markets were selling off amid high volatility and fears that interest rates may need to go higher to fight inflation. To hedge against my equity positions, I purchased several 1 year CDs with JPMorgan Chase (JPM) that had interest rates ranging from 5.55 to 5.65%. This past week, I received multiple redemption notices on these CDs, meaning JPMorgan Chase had decided to call these securities three to four months before maturity. In order to find a relatively comparable income return, I opted to avoid renewing CDs at a lower rate and instead purchased Series EE ( JPM.PR.C ) and Series DD ( JPM.PR.D ) preferred shares at yields of 5.75% and near 6%....

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