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First Citizens BancShares Preferred Stock Underperforms Yield

Shares of First Citizens BancShares' preferred stock face challenges as they yield below average in the financial sector. Investors should note the risks regarding dividends not being cumulative.

Date: 
AI Rating:   5

Overview of Dividend and Yield
First Citizens BancShares Inc's 5.375% Dep Shares Non-Cumul Prfd Stock Series A (FCNCP) is currently experiencing a yield above 6%, based on its quarterly dividend of $1.3438. However, this yield falls short of the average yield of 7.31% within the "Financial" preferred stock category, indicating that FCNCP is less attractive in terms of return on investment compared to its peers.

Discount to Liquidation Preference
The stock is trading at a 10.04% discount to its liquidation preference amount, while the average discount in the same category is 8.09%. This larger discount may signal concerns among investors regarding the financial health of FCNCP or market conditions affecting it.

Missed Payments Risk
Investors should also take into account that FCNCP shares are non-cumulative. If there were to be a missed dividend payment, the company does not have to compensate shareholders for these missed payments before any future common dividends. This feature depends heavily on the company's cash flow and profitability, adding to the investment's risk level.

Stock Performance
In Thursday trading, FCNCP shares are reported to be down approximately 0.8% on the day, which was not as severe as the common shares (FCNCA), which fell about 3.2%. This may indicate some level of investor preference for the preferred stock over common shares during adverse market movements.

Stocks:  FCNCP FCNCA