What Are Preferred Stocks? Preferred stocks are a bit like a hybrid - part stock, part bond. They give you steady income like a bond, but with the potential for price appreciation like a stock. Think of them as the middle ground between the two. Here's how they work: - Dividends First Preferred stockholders get paid before common stockholders. If a company runs into trouble and has to cut dividends, they'll cut the common stock dividend first. Preferred dividends are like the VIPs - they're last in line to get cut.
- Higher Yields Preferred stocks typically pay higher dividends than common stocks or bonds. For example, WFC-Z is yielding 6.2% right now. Compare that to the 10-year Treasury bond, which is around 4.3%. That's a difference of almost 2%!
- Call Price and Redemption Preferred stocks usually have a "call price." This is the price the company can buy them back for, typically $25. Here's the kicker: WFC-Z is trading slightly above $19 right now, but if Wells Fargo ever calls it, they'll pay you $25. That's over a 30% potential upside.
- No Voting Rights Unlike common stocks, preferred stocks don't give you voting rights. But really, who cares? Are you planning to change Wells Fargo's corporate strategy with your one vote? No, you're here for the income and reliability.
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Okay, But What's With the "Series"? Here's where people get confused. Companies like Wells Fargo issue different series of preferred stocks, and each one has slightly different terms. Let's break it down: - A Series is like a label to distinguish between different preferred stock offerings from the same company. Think of it like different flavors of ice cream at the same shop.
- For example, Wells Fargo might have Series A, Series B, Series C… all the way to Series Z.
- Each "series" has its own dividend rate, call price, and other details. So WFC-Z is the Series Z preferred stock from Wells Fargo.
The important thing is to focus on the specific series you're buying. In this case, it's WFC-Z. When you're placing the trade, make sure your broker knows it's the Series Z. (Some brokers might list it as WFC PRZ or WFC Preferred Z, depending on how they label preferred shares. If in doubt, call your broker - don't guess!) Why Preferred Stocks Shine in This Market Let's get real. With all the uncertainty out there - tariffs, inflation, interest rates - preferred stocks are a safe haven. They offer consistent income no matter what the broader market is doing. And here's the best part: even during the 2008 financial crisis, when bank stocks were getting hammered, most preferred stocks kept paying dividends. Wells Fargo's common stock dropped to $5, but their preferred stockholders? They kept collecting checks. That's the kind of reliability you want in your portfolio. Why WFC-Z Specifically? All right, now that you know what preferred stocks are, let's talk about why WFC-Z is such a great pick right now. 1. High Yield At a 6.2% yield, you're getting paid significantly more than Treasury bonds, CDs, or even most dividend-paying stocks. And because these dividends are qualified, they're taxed at a lower rate (15-20%) instead of your regular income tax rate. 2. Discount to Call Price Here's the math: WFC-Z is trading slightly above $19, but its call price is $25. If Wells Fargo ever decides to redeem these shares, they have to pay you $25 each. That's a potential upside of over 30%, plus the 6.2% yield you'll collect while you wait. But let's unpack what this call price actually means. Preferred stocks like WFC-Z come with a call price, which is the price the issuing company (Wells Fargo in this case) can pay to redeem or buy back the stock. For WFC-Z, the call price is $25 per share. This means that if Wells Fargo decides to "call" the stock, they'll pay you $25 per share - no matter what you paid for it. So why does this matter? Right now, WFC-Z is trading slightly above $19. If Wells Fargo ever calls it, they'd pay you $25 per share, giving you over a 30% potential upside - and that's not even counting the 6.2% annual dividend you'd be collecting while you wait. Now, I know what you're thinking: How often do companies call preferred stocks? The short answer? It depends on interest rates. - When Do Companies Call Preferred Stocks? Companies are more likely to call preferred stocks when interest rates drop. If they can refinance at a lower dividend rate, it makes sense for them to call in the existing shares and issue new ones at a lower cost - kind of like refinancing a mortgage.
- When Are They Less Likely to Call? If interest rates stay high (or go higher), companies are less likely to call preferred stocks because they'd have to issue new ones at an even higher dividend rate.
Right now, with rates still high, it's unlikely that Wells Fargo will call WFC-Z anytime soon. That means you're in a great position to collect that 6.2% yield for the foreseeable future. And if they do call it down the line? No problem - you'll walk away with a nice gain and all the dividends you collected along the way. 3. Safety and Stability Wells Fargo is one of the largest and most stable banks in the world. They're not going anywhere, and their preferred dividends are a priority. That makes WFC-Z a relatively low-risk play, even in today's wild market. YOUR ACTION PLANHere's the plan: start small. Take a half position - if you'd normally invest $5,000, start with $2,500. Why? Because if interest rates rise, preferred stock prices could dip, and you'll have cash ready to buy more at a better price. Preferred stocks like WFC-Z reward patience and long-term thinking. They're not meme stocks or crypto - they're steady, reliable income plays. And the strategy is simple: - Buy under $19 (don't chase it).
- Start small and leave room to add if prices dip.
- Collect your dividends, ignore the noise, and let your portfolio grow.
With a 6.2% yield, potential for a 30% upside, and the backing of one of the world's largest banks, WFC-Z is a smart, steady play in a chaotic market. This is just one of the many opportunities we uncover in Catalyst Cashouts Live. If you're ready to go deeper - breaking down the markets, identifying undervalued plays, and positioning for profits with real-time trade alerts - it's time to join us. Don't wait. Click here to get started today!
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