This preferred stock is backed by one of the largest banks in the U.S.
Bank of America Corporation (BAC-PM)
From Income Securities Investor
Bank of America Corp.; 5.375% Fixed Rate Perpetual; Par $25.00; Annual Cash Dividend $1.34375; Current Indicated Yield 5.05%; Call Date 06/25/24; Yield to Call 3.87%; Pay Cycle 3e; Exchange NYSE; Ratings, Moody’s Baa3, S&P BBB-; CUSIP 06053U601
Bank of America Corp. (BAC) is a leading worldwide, diversified financial institution. The banking company serves consumers, small and middle-market businesses, and large global corporations. BAC offers a full range of products and services across commercial and investment banking, asset and wealth management, investing, and risk management.
The fixed rate preferred is callable on 06/25/24 or any dividend payment date thereafter, at par plus declared dividends. Proceeds from this issue were earmarked for general corporate purposes, but BAC has been redeeming its higher-coupon preferreds.
The company reported adjusted Q319 net income of $7.5 billion or $0.75 per share, easily topping analysts’ $0.68 estimates. Bottomline results were up roughly 5% from a year ago, benefiting from consumer banking, which saw net income advance 5% from a year earlier to $3.3 billion. Global wealth and investment management contributed to consolidated earnings momentum, as associated net income increased 8% to $1.1 billion.
Dividend distributions from this preferred issue are qualified and taxed at the 15%-20% rate. This investment is suitable for low- to medium-risk taxable portfolios. Buy up to $27.30 for a current yield of 4.92%, and a 3.25% yield to call.
Martin Fridson, CFA, Income Securities Investor, www.isinewsletter.com, 800-472-2680, November 2019