2024-04-27 11:40:00 ET
Summary
- Bank of America's Q1 financial results showed a small increase in net interest income and a decrease in non-interest expenses.
- The FDIC Special Assessment had a negative impact on the bank's net income, but preferred dividends remain safe.
- The Series HH preferred shares have a fixed dividend yield of 5.98% and are currently trading below par.
- The Series L "busted" preferred shares appear the better choice.
Introduction
A portion of my portfolio is dedicated to fixed income securities to generate a steady stream of cash inflow from interest payments and preferred dividend payments. In the preferred equity segment, I usually try to buy cumulative preferred shares (so the issuer has to make preferred shareholders whole on all outstanding dividends before it can pay a single cent as a dividend on its common shares), but due to changing capital rules since the global financial crisis, the perpetual preferred equity issued by financial institutions is non-cumulative in nature. This means that the banks are allowed and able to skip preferred dividend payments, but fortunately the issuers realize the reputational damage would do more harm than the cash savings generated by not paying the preferred dividend....
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Earning A 6-6.25% Preferred Dividend Yield With Bank of America