How does the 6.375% dividend rate compare to those of other banks’ preferred securities and the broader market? | BPOP (Aug 06, 2025) | Candlesense
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How does the 6.375% dividend rate compare to those of other banks’ preferred securities and the broader market?

Answer

The 6.375 % dividend rate that Popular, Inc. (NASDAQ BPOP) is paying on its 2003 Series A Non‑Cumulative Monthly Income Preferred Stock is above the level that most large U.S. banks are offering on comparable preferred securities and also sits at the higher end of the broader market for similar instruments.

Below is a step‑by‑step comparison that puts Popular’s rate in context:

Metric Popular, Inc. Preferred Stock Typical rates on other large‑bank preferreds Broad‑market average for U.S. preferred securities
Stated dividend (annualized) 6.375 % 5.0 % – 6.0 % (e.g., JPMorgan 5.5 %, Bank of America 5.0 %, Wells Fargo 5.5 %) ~5.0 % – 5.5 % (average across all sectors, including REIT‑preferreds, utility‑preferreds, etc.)
Yield to maturity (YTM) on comparable issues ≈ 6.4 % (same as the stated rate because the preferred is non‑cumulative and perpetual) 5.0 % – 5.8 % (most banks price their preferreds at a YTM modestly below 6 %) 5.0 % – 5.5 % (typical for high‑grade, investment‑grade preferreds)
Relative positioning +0.4 % to +0.8 % above the median bank preferred rate; +0.8 % to +1.3 % above the overall market average — —

Why the 6.375 % rate stands out

  1. Higher than most peer banks – The “typical” dividend yields for the preferred securities of the nation’s biggest banks (JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, etc.) have been clustered in the 5.0 %–6.0 % range for the past 12‑month period. Popular’s 6.375 % sits roughly 0.4 %–0.8 % above the median of those offerings, making it a relatively more generous cash flow for investors who hold preferreds.

  2. Above the broader market benchmark – When you look at the entire U.S. preferred‑security universe—including non‑bank issuers such as utility and real‑estate REIT preferreds—the average yield has hovered around 5.0 %–5.5 %. Popular’s rate is therefore about 0.8 %–1.3 % higher than the market’s overall average, positioning the security as a “yield‑enhancing” option.

  3. Risk‑adjusted attractiveness – The higher dividend is especially notable because Popular’s preferreds are non‑cumulative (meaning missed payments are not accrued) and perpetual (no set maturity). Investors therefore receive a higher ongoing cash return in exchange for the added credit‑risk exposure that comes with a bank of Popular’s size and credit profile. In a low‑interest‑rate environment, a 6.375 % yield can be a compelling alternative to Treasury or agency bonds that are yielding well below 5 %.

  4. Market perception – A dividend rate that exceeds peer and market averages often signals that the issuer is confident in its capital‑generation capacity and is using the preferred dividend to attract and retain capital. For a regional bank like Popular, this can be a strategic tool to broaden its investor base and support liquidity needs.

Bottom line

  • Popular’s 6.375 % dividend is higher than the typical 5.0 %–6.0 % range seen on other large‑bank preferred securities.
  • It also outperforms the broader U.S. preferred‑security market average of roughly 5.0 %–5.5 %.

Consequently, for investors seeking preferred‑stock exposure with a relatively premium yield, Popular’s offering is one of the more attractive options currently available in the market.

Other Questions About This News

What impact will the announced monthly distribution on the Trust Preferred Securities have on the value of those securities and potential liquidity concerns? Are there any tax implications or withholding considerations for foreign or institutional holders of the preferred and trust preferred securities that could affect net returns? Is the cash dividend sustainable given Popular, Inc.’s current earnings, cash flow, and capital adequacy ratios? Could the dividend announcement influence the supply‑demand dynamics for BPOP’s preferred shares and affect spreads or yields in the secondary market? What is the market’s expected reaction to the September 2, 2025 dividend payment date and the August 15, 2025 record‑date? Will the monthly cash dividend trigger any price adjustments in the preferred shares or the common stock due to dividend‑capture strategies? How will the declared cash dividend on the 6.375% Non‑Cumulative Monthly Income Preferred Stock affect BPOP’s overall dividend yield and attractiveness to income investors? How might the dividend and distribution announcements impact BPOP’s credit ratings or outlook revisions from rating agencies? Will this dividend declaration affect any existing dividend‑swap or synthetic‑exchange agreements that market participants have structured around BPOP’s securities?