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Preferreds 101 (and 3 worth a look right now)

Preferreds sit between bonds and common stock: steadier checks than common, more upside than bonds. They’re great “quiet money” for dividend-first investors who don’t need every dollar to grow, but want fewer surprises than high-yield common.

They do come with quirks: odd tickers, call features, and tax differences. Today we’ll keep it simple—what they are, how they pay, and three liquid series to consider with current yields ~5.6%–6.1%.

What exactly is a preferred?

Preferred shares are equity with bond-like dividends. Most pay a stated dividend rate on a $25 par, often non-cumulative for banks (missed dividends don’t accrue) and cumulative for many REITs (missed payments stack up and must be paid later). Dividends are declared by the board, usually quarterly. On the risk ladder, preferreds rank above common stock but below bonds in a liquidation.

Two more terms you’ll see: callable (issuer can redeem at par, typically after five years) and qualified dividends (some bank preferreds get favorable tax treatment if holding rules are met). Always skim the prospectus supplement for the rate, call date, and tax language.

Fixed, fixed-to-floating, and reset (in 30 seconds)

• Fixed rate: coupon never changes. Simple math; most REIT preferreds fall here. Public Storage’s current low-coupon series are classic examples.
  

• Fixed-to-floating / reset: starts fixed, then switches to SOFR + spread or resets every five years off a swap rate. These can track rates better—but read the fine print on first call/reset dates.
  

• Non-cumulative vs. cumulative: banks = typically non-cumulative by regulation; many REITs = cumulative. That difference matters in stress.

Three preferreds worth a look now

Below are three liquid issues with straightforward terms and upcoming or recent ex-dates. Yields shown are math-based (annual dividend ÷ recent price) and may vary with price.

1) JPMorgan Chase 4.75% Preferred, Series GG (Ticker: JPM.PRJ)

• Type: Non-cumulative, perpetual; $25 par; pays $1.1875/yr. First callable anytime after original call window (per prospectus).

• Recent price & yield: Around $21.09 ⇒ ~5.63% current yield.

• Cadence: Quarterly; next ex-date Nov 3, 2025 (as currently listed by market data services).

• Why it’s interesting: Money-center bank with deep earnings power; coupon is modest but discount to par cushions duration. JPM also regularly declares preferred dividends across series (a good “continuity” tell).

2) Capital One 4.25% Preferred, Series N (Ticker: COF.PRN)

• Type: Non-cumulative, perpetual; $25 par; pays $1.0625/yr; first call 9/1/2026. Terms spelled out in the Series N prospectus.

• Recent price & yield: Around $17.54 ⇒ ~6.06% current yield.

• Cadence: Quarterly. Last ex-date Aug 15, 2025; many trackers show the next expected ex-date mid-November (check before trading).

• Why it’s interesting: Solid consumer bank franchise, Series N trades well below par, boosting yield. Company IR regularly posts quarterly preferred declarations, including the September payout timeline.

3) Public Storage 4.00% Preferred, Series P (Ticker: PSA.PRP)

• Type: Cumulative REIT preferred; $25 par; pays $1.00/yr. Public Storage’s IR page lists the active series and terms.

• Recent price & yield: Around $17.12–$17.18 ⇒ ~5.83%–5.82% yield range. Last ex-date Sep 15, 2025.

• Why it’s interesting: REIT cash flows tied to thousands of mini-leases; cumulative feature adds protection if the cycle gets bumpy.

How to read (and sanity-check)

• Start with par and coupon. Multiply coupon × par to get the annual dividend, then divide by the current price for yield. If a site’s yield doesn’t match your math, trust your math.
  

• Scan the prospectus supplement for the call date, cumulative status, and reset math (if any). Quick read, big clarity.
  

• Verify ex-dates in two places (IR release + a market data page) before any “dividend capture.” Schedules move with holidays and weekends.

What could go wrong

Call risk: If an issue is trading above $25 and gets called at par, price drops to $25 overnight. Even below par, a call can end a nice yield stream sooner than you hoped.

Rate risk: Fixed coupons lose luster if yields elsewhere jump. Fixed-to-floating helps, but only after the reset date—and many can be called instead of reset.

Non-cumulative risk (banks): Missed dividends don’t accrue. That’s normal for money-center banks, but worth remembering in a hard credit cycle.

Quick metrics (today’s snapshot)

*Payout ratio isn’t meaningful for preferreds the way it is for common stock; coverage is assessed at the issuer level. Prices and ex-dates sourced from market data pages; dividend amounts and terms confirmed via prospectuses/IR.

“How to use this” (3 quick ideas)

• Build your “quiet sleeve.” If your common-stock income already covers the essentials, a preferred sleeve can smooth the ride—especially with cumulative REIT issues.
  

• Ladder call dates. Mixing near-call and far-call issues helps reduce call surprises. Check Series N’s 9/1/2026 first-call as a template.
  

• Mind taxes. Many bank preferreds pay qualified dividends; REIT preferreds generally don’t (they may include return-of-capital). Always verify in the prospectus and your 1099.

Dividend changes (recently declared): JPMorgan’s board declared preferred dividends across multiple series in July; ongoing declarations typically precede each quarter. Capital One posted Series N quarterly details tied to its September 2, 2025 payment (record date Aug 15). Public Storage maintains a clear preferred securities page listing each series and terms.

Final takeaway: Preferreds won’t sprint, but they jog faithfully. If you want steadier checks without levering up on junk yield, the trio above offers simple terms, decent liquidity, and yields near 6%—just be sure to double-check call dates and ex-dates before you hit buy. Not financial advice. Do your own research.

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.