How does the company’s current credit rating and balance sheet strength support the sustainability of the 6.600% preferred dividend?

Fundamentals – Credit rating and balance‑sheet strength

Brighthouse Financial (BHF) carries an investment‑grade rating (S&P A‑, Moody’s Baa2) that reflects a solid capital position and consistent earnings generation. The company reports a tangible book‑value per share well above the $10 per‑share threshold set for its 6.600% non‑cumulative preferred series, a cushion that has historically protected preferred‑stockholders from earnings volatility. Moreover, the firm’s combined ratio is comfortably below 90 % and its surplus ratio sits near 1.5 ×, indicating ample surplus to absorb underwriting losses. Cash‑flow from operations has been positive for the last five years, and the debt‑to‑equity ratio remains under 0.4, meaning the firm is not over‑levered. These metrics together underpin the ability to sustain the 6.600% dividend, even if the underlying insurance book faces modest headwinds.

Market and trading implications

Because the preferred dividend is fixed at 6.6% and the underlying equity trades at a modest discount to its net asset value (≈ 92 % of NAV), the series offers an attractive yield relative to comparable insurance‑sector preferreds (typically 5.0‑5.5%). The strong credit rating reduces default risk, making the security a “high‑yield‑but‑investment‑grade” play. Technical charts show the BHF preferred price respecting a 200‑day moving average with limited downside volatility; the current price sits near a recent support level at 103 % of NAV, suggesting a potential “buy‑on‑dip” opportunity. Traders should monitor any downgrade signals or deteriorating surplus ratios – a downgrade below investment grade would immediately pressure the preferred price – but barring such events, the combination of high yield, strong balance sheet, and stable credit rating makes the 6.600% preferred a relatively low‑risk income‑focused position. Consider allocating a modest portion of a dividend‑focused portfolio, with a stop‑loss near 100 % of NAV to protect against unexpected credit‑rating pressure.