WFC - Wells Fargo: Adding Duration To My Portfolio With A 6.3% Yielding Preferred

2024-06-22 11:40:00 ET

Summary

• Reviewing Wells Fargo & Company's Series L preferred shares, focusing on preferred dividend coverage and financial performance.
• Despite the decrease in net income, preferred dividends remain well-covered with a payout ratio of 6.6%.
• Series L preferred shares offer 6.3% yield, low probability of forced conversion, making it a preferred choice for adding duration to a portfolio.

Introduction

As mentioned in some of my previous articles , I’m trying to add some duration to my fixed income portfolio. Preferred shares are an important part of my income-focused portfolio, but I am keeping close tabs on the financial performance of the issuers on a quarterly basis, just to make sure I can take action if/when there’s a need to fine-tune my positions. My objective is to review these investments on a quarterly basis, which is even more important for the non-cumulative preferred shares (where preferred dividends can be skipped). Although that’s not a major concern of mine, as the reputational damage of skipping a preferred dividend would be far worse than the few hundred million dollars it would save a company....

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