The Top Yields In Non-Cumulative Preferred Stocks

This article is being written to introduce 5 companies with 8 non-cumulative preferred stocks that are currently among the highest yields in this class of preferred stocks. It is my experience that most analysts recommend against investing in non-cumulative issues. After all, if you have a choice between a cumulative and non-cumulative issues with the same or similar characteristics of price, safety, and ability to pay the dividend, why take the extra risk with the non-cumulative preferred? Before I try to answer that question, here is how I define what a non-cumulative preferred stock is.
A non-cumulative preferred stock is a type of preferred stock that allows the issuing company to skip or omit paying the dividends. This cancels the company's obligation to eventually pay those dividends and means that shareholders do not have a claim on any of the dividends that were not paid out. Keep in mind that they must first stop paying the common stock dividend before they stop paying the preferred dividend.
That definition doesn’t sound too encouraging for shareholders, but what is the likelihood of a company skipping payments and then continuing on in business? I reviewed the records of companies with non-cumulative preferred stocks that have suspended dividends on QuantumOnline over the last 10 years.
YEAR
SYMBOL
COMPANY NAME
# ISSUES SUSPENDED
OPEN / CLOSED
2008
OTCQB:FNMA
Freddie Mae
14
Open
2008
OTCQB:FMCC
Freddie Mac
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