First Horizon Preferred Stock Offers Competitive Yield Above 7%

Investors are eyeing First Horizon Corp's preferred stock, FHN.PRE, yielding over 7% on its dividend. This heightened yield positions it competitively within the Financial preferred stock category, presenting potential investment interest.

Date: 30-04-2025

AI Rating: 6

Overview of FHN.PRE Performance
In the report, First Horizon's 6.50% Dep Shares Non-Cumulative Preferred Stock, Series E (FHN.PRE) boasts a dividend yield exceeding 7%. This competitive yield continues to attract investor attention, especially given a prevailing yield of 6.60% among Financial preferred stocks. The stock was trading at $23.15, reflecting a 6.36% discount to its liquidation preference. It is noteworthy that these shares are non-cumulative, meaning missed dividend payments do not need to be paid back before resuming common dividends. Such characteristics could impact investor sentiment as it increases risk exposure for preferred shareholders.

Implications of Non-Cumulative Nature
The non-cumulative feature can be a double-edged sword. While the high yield is appealing, it also suggests that investors must carefully evaluate their risk tolerance. In light of recent market fluctuations and economic conditions, the stability of First Horizon’s cash flow to support ongoing dividend payments will be essential for maintaining this attractive yield. Investors must monitor the company's financial health, looking closely at indicators such as revenue growth and profit margins, which were not explicitly covered in the report but are crucial for ensuring dividend sustainability.

Comparative Performance and Investor Strategy
First Horizon is trading against an average discount of 10.91% in its category, indicating that while FHN.PRE is performing better relative to some peer preferred stocks, caution is warranted. The common stock for First Horizon (FHN) has seen a minor decline of 1.2% on the same trading day, highlighting potential volatility in market sentiment towards the company. This mixed performance might suggest a divergence in perception between common and preferred shareholders' levels of confidence in First Horizon's stability. Investors should keep a close watch on upcoming earnings reports to gauge potential revenue growth and net income, which could undoubtedly influence future pricing and yield expectations more broadly.

Stocks: FHN