Webster Financial's Preferred Stock Yield Drops Below 6%

In a recent report, Webster Financial Corp's preferred stock yielded over 6% based on its quarterly dividend, yet faced a significant drop on trading day. This decline, alongside a comparison to industry standards, could impact investor sentiment.

Date: 18-09-2024

AI Rating: 5

Webster Financial Corp's 5.25% Series F Non-Cumulative Perpetual Preferred Stock (Symbol: WBS.PRF) presents a notable situation in the market. The stock is currently yielding above the 6% mark, based on a quarterly dividend of $1.3125, although it is trading at a discount of 10.96% to its liquidation preference amount, which is significantly higher than the 5.83% average discount in the "Financial" category.

It is crucial to highlight that this preferred stock is non-cumulative, meaning any missed dividend payments will not be carried forward and must be cleared before common dividends can be resumed. This setup may deter some investors, as it places a higher risk on preferred shareholders should the company face financial difficulties.

On the trading day referenced, WBS.PRF was down approximately 1.8%, which contrasts sharply with the common shares (Symbol: WBS) that experienced a rise of about 1.8%. This divergence in performance could suggest varying levels of confidence among investors regarding the company's immediate financial health.

The yield of WBS.PRF being lower than the average yield of 6.50% in the Financial category may also reflect a more cautious outlook from market participants. Generally, lower yields compared to peers could indicate a perception of higher risk associated with the stock.

Stocks: WBS