I devoted the cover story of the March Dividend Superstars newsletter to preferred shares, and in a follow-up this past month, I talked about additional risks associated with this unique class of stock.
Today, I came across an interesting rumor that is floating around: Six of the 19 banks that were given “stress tests” have inadequate capital at the moment, and one of the ways Washington wants them to shore up their balance sheets is by converting preffered shares to common.
It’s just another reason to be sketptical of the big yields available from some of the financial preferreds right now … and it also suggests that there is further dilution in the cards for common shareholders, too.
Related posts:
- The latest Bank of America news … Bank of America (BAC: 16.09 +0.01 +0.06%) is down sharply today on rumors of additional bailout money from Washington. While...
- More on Bank of America … another dividend cut. Today, Bank of America’s shares will likely rally on the announcement of another $20-billion bailout package from Washington. However, in...
- Stressing Over the Stress Tests … Seems as though a panel of Federal investigators is now suggesting that we may need a second opinion on those...
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