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Daily Alert - 6/11/20

This is a is a fully integrated investment banking company.

This preferred issue is backed by one of the largest banks with offices around the globe.

Morgan Stanley (MS-PL)
From Income Securities Investor

Morgan Stanley; 4.875% Fixed Rate, Non-Cumulative Perpetual; Par $25.00; Annual Cash Dividend $1.21875: Current Indicated Yield 5.00%; Call Date 01/15/25 at $25.00; Yield to Call 5.47%; Pay Cycle 1m; Exchange NYSE; Ratings, Moody’s Ba1, S&P BB+; CUSIP 61762V804

Morgan Stanley (MS) is a fully integrated investment banking company, offering Investment and Wealth Management Services, Investment Banking & Capital Markets Operations, Lending, and Sales & Trading at both the Institutional and Retail level. The firm has one of the largest retail brokerage operations in the U.S. market.

Earnings and profitability over the last five-year period have been solid. This preferred stock issue is fixed rate and callable at par plus declared dividends on 01/25/25 or any dividend payment date thereafter.

MS reported solid 1Q 2020 earnings although net income of $1.7 billion or $1.01 per share fell short of analysts’ $1.15 estimates. Top line revenue was also a bit shy of analysts’ expectations. Management said the COVID-19 pandemic negatively affected each of the company’s major businesses. Nonetheless, MS achieved solid results in the face of economic turmoil.

Although financial results may remain under pressure over the remainder of 2020, we expect upward momentum in 2021. This preferred investment is suitable for low- to medium-risk taxable portfolios. Dividends are qualified and taxed at the 15%-20% rate.

We point out that MS’s senior debt is rated A3 by Moody’s and BBB+ by S&P. Buy up to $25.50 for a 4.78% current yield and 4.40% yield to call.

Martin Fridson, CFA, Income Securities Investor,, 800-472-2680, June 2020