Today’s recommendation is a preferred share from Forbes/Lehmann Income Securities Investor. Preferred stocks have some of the benefits of bonds — like regular distributions and priority in bankruptcy — but with the capital appreciation potential and tradability of regular stocks.
“Charles Schwab Corp. 6.00% Series B (SCHW-B) — These depositary shares each represent 1/40th of a share of 6.00% Non-Cumulative Perpetual Preferred Stock issued by Charles Schwab Corporation (SCHW). The company is a major provider of financial services, with more than 300 offices serving 8.7 million active brokerage accounts, 1.5 million corporate retirement plan participants and 815,000 banking accounts.
“Through its operating subsidiaries Charles Schwab & Co. and Charles Schwab Bank, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. First quarter 2012 revenue was $472 million and reported net income was $195 million. For the same period 2011 revenue was $496 million and net income was posted at $238 million. The dividends from this security are both QDI and DRD eligible and thus would be a good addition to any portfolio. ... Note, according to Schwab, it is not allowed to let their customers buy this security because of SEC rules. Buy the Schwab preferred at or below $26.10.”
- Jack Colombo, Forbes/Lehmann Income Securities Investor, July 2012