Here’s the Preferred Stock Thompson Clark of Smart Money Monday likes best This recommendation was written April 17 2023 CEO Jamie Dimon is the best-known banker in America and has guided JPMorgan over the years to become the largest bank in the US. It has total assets of $3.7 trillion—a truly astounding number. Bank of America Corp. (BAC) is behind JPM at $3 trillion, followed by Citigroup Inc. (C) and Wells Fargo & Co. (WFC) at $2.3 trillion and $1.8 trillion, respectively. JPMorgan’s common stock currently pays a reasonably attractive 3% dividend and trades for 1.4X book value per share. This is a high-level way to look at a bank. The theory goes, if you liquidated the bank, you’d get at least the book value in return. This never happens in principle, but it’s one way to think about it. 1.4X isn’t screaming expensive, but it’s not that cheap either. I prefer JPM’s preferred stocks... There are many to choose from, but the one I like best on the menu is the 4.75% Series GG preferred stock. The ticker is JPM-J. It currently trades for $22.31. Every year, JPM-J shareholders receive approximately $1.18 per share in dividends, paid quarterly. That’s a 5.3% yield at current prices. Between now and the call date (the first call date is December 1, 2024), I suspect it will pay a total of six quarterly payments of $0.30 per share. And then, when the call date arrives in December 2024, it’s entirely possible JPMorgan decides to redeem the preferred stock. Again, it doesn’t buy it at the market price. It pays par—in this case, $25 per share. Adding it all up, you should get $27 per share in value between now and December 2024. And at today’s $22.31 share price, that’s a juicy 20% return. On an annualized basis, that’s better than 10% per year. It’s a market-beating result. So, if you’re looking for a stable income investment with potential capital appreciation upside, this looks like a winner.

Posted by Suze at 2023-05-28 11:13:15 UTC