|
|
Preferred Shares On Fire
Posted: Sep 08, 2009 14:54 PM by Aryeh Katz
Preferred shares are an investing dullard's fantasy - or, at least they're supposed to be. It's not the norm to see preferred shares climb 100% to 200% in a matter of months. But then again these are not normal times.
IN PICTURES: Seven Ways To Position Yourself For Recovery
Most preferred shares are issued at $25 and see daily movements of, at best, a few cents up or down from that level. And so it continues for years at a stretch. To even contemplate a drop of 50% or more in, say, a bank preferred share is enough to send these investors to the emergency ward.
But last fall, everything changed. It was the preferred shares that were at the heart of the downdraft, and government intervention in the financials (from whom most preferred shares are issued) sent the entire class of securities into a tizzy, from which they're only now recovering.
Here are three big name preferred shares from across the investment spectrum that offer great dividends and have some momentum behind them. (For an overview of preferred stocks, see A Primer On Preferred Stocks.)
1. One of Buffet's Banks
Wells Fargo CAP IV 7.00% trust preferred shares (NYSE:WSF) are currently yielding 7.3% and trade below par at $23.90. The preferred shares of the nation's number one home lender have travelled a great distance, rising over 140% since only mid-March of this year.
Wells Fargo (NYSE:WFC) recently announced that it shortly plans to return the Federal Government's TARP money taken last year in the midst of the sub-prime crisis, and to do it in a "shareholder friendly" manner.
2. Global Metals Mining Leader
Freeport McMoran Copper and Gold 6.34% Mandatory Convertible Preferred shares (NYSE:FCX-M) also trade below par at $93.64, offering investors 7.2% annually. Freeport McMoran preferred shares have risen about 200% since bottoming in the fourth quarter of 2008.
Freeport (NYSE:FCX) is a global leader in copper and molybdenum mining. The company has suffered several deaths in recent months to employees working at the Grasberg mining complex in Indonesia, and just this week received military support from the Jakarta Government to resume operations.
3. Ploughing To the Top
Schering Plough Corp Preferred B Series (NYSE:SGP-B) pays investors a handsome 6.3% annual dividend, and are up over 100% since setting 52-week lows in the October depths of last year's market crisis.
Schering Plough (NYSE:SGP) is a global pharmaceuticals company with a market cap in excess of $44 billion.
The Wrap
Life is good in the world of big-cap preferred share investments, especially for those who had the what-for to buy when prices were beaten up and thrown in the dumpster. That said, these issues still pay handsomely. Perhaps the days of the dullard have returned.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Rate this Article:
Your Rating:
Overall Rating:
Vote Now!
MORE STOCK ANALYSIS
 Loading...
THE BEST OF INVESTOPEDIA
Loading...
|
CURRENT HIGH YIELD SAVINGS RATES
Rate data provided by
|
