US Bancorp's Preferred Stock Shows Yield Trends and Discounts

US Bancorp's preferred shares yield above 5.5% but trade at a notable discount. Investors should note the non-cumulative feature which could affect future dividend payouts.

Date: 07-01-2025

AI Rating: 5

Yield Analysis: The yield on US Bancorp's 4.50% Dep Shares Non-Cumulative Perpetual Preferred Stock Series O stands above 5.5%, based on its quarterly dividend annualized to $1.125. This yield is below the average yield of 6.52% for the "Financial" preferred stock category, indicating the shares may be less attractive to investors seeking higher income.

Discount to Liquidation Preference: The shares are currently trading at a 17.96% discount to their liquidation preference amount, significantly higher than the average discount of 7.72% in the "Financial" category. This steep discount suggests potential concerns about the stock's value or the company's ability to maintain dividend payments.

Non-Cumulative Feature Impact: The non-cumulative nature of USB.PRS means that in the event of missed payments, the shareholders are not entitled to recover missed dividends before any common dividends. This characteristic might deter risk-averse investors, particularly during volatile periods.

Day Trading Performance: On Tuesday, USB.PRS shares dropped approximately 1.3%, while common shares of US Bancorp (USB) saw a moderate increase of about 0.5%. This divergence in performance could reflect investors' sentiment towards preferred versus common equity, particularly regarding risk and yield expectations.

Stocks: USB