- By John L. Varga, III, ASA
- September 18, 2019
Preferred stock continues to trade at yields below historical averages. Despite increases in benchmark rates by the Federal Reserve, on the whole, we continue to be in a low interest rate environment. Preferred stock is often viewed as a debt-like instrument due to its fixed dividend rate. This implies that preferred stock is valued and trades like debt, meaning increases in market interest rates may push preferred yields higher and preferred stock prices lower, and vice versa.
MPI conducted an update of its preferred stock database as of June 30, 2019, and compared general levels of interest rates to those observed on December 31, 2018. Interest rates and preferred stock yields have been low by historical standards, and may be heading lower in the coming periods. To read the full report, click here.
MPI, a prestigious national consulting firm founded in 1939, specializes in business valuation, forensic accounting, litigation support and corporate advisory work. MPI provides fairness opinions, sell-side and buy-side advisory services through its investment banking affiliate MPI Securities, Inc. MPI conducts every project as if it is going to face the highest level of scrutiny, and its senior professionals have extensive experience presenting and defending work product in front of financial statement auditors, management teams, corporate boards and fiduciaries, the IRS, other government agencies, and in various courts.