25
Stocks Ranked
5-8%
Yield Range
$25-50
Par Values
8
GSE Preferreds
The Case for Preferred Stocks
Preferred stocks sit in the sweet spot of the capital structure — above common equity, below bonds. They pay fixed dividends that take priority over common dividends, and they trade on exchanges like stocks. For income investors, preferreds offer yields that bonds cannot match without the volatility that common stocks deliver.
This list is not a generic screen. It is a conviction-weighted ranking that puts the GSE preferreds — Fannie Mae and Freddie Mac — at the top because that is where the most asymmetric opportunity exists. If conservatorship ends and preferred shareholders are honored, these securities could deliver returns that no bond or blue-chip preferred ever will.
Below the GSE preferreds, the list includes the highest-quality income preferreds in the market — from JPMorgan and Public Storage to NextEra Energy and Goldman Sachs. Every pick is here because the yield is real, the credit is sound, and the risk/reward makes sense for income-focused investors.
FNMASSuspended (speculative upside)
Federal National Mortgage Association (Fannie Mae)
FNMAS is the Series S preferred stock of Fannie Mae, the government-sponsored enterprise that guarantees approximately half of all U.S. mortgages. Since the 2008 conservatorship, Fannie Mae's preferred shares have traded as speculative instruments — their dividends are suspended, but they carry enormous potential upside if the GSEs are ever released from conservatorship and recap.
The single most debated preferred stock in America. If Fannie Mae exits conservatorship, FNMAS holders could see returns of 5-10x or more. Glen Bradford has been publicly writing about the GSE preferred thesis for years.
FMCKJSuspended (speculative upside)
Federal Home Loan Mortgage Corporation (Freddie Mac)
FMCKJ is the Series K preferred stock of Freddie Mac, Fannie Mae's smaller counterpart in the government-sponsored mortgage market. Like all GSE preferred shares, FMCKJ's dividends have been suspended since the 2008 conservatorship, and the stock trades as a bet on the eventual resolution of the GSE housing finance reform.
Freddie Mac's most liquid preferred series with a $50 par value. Same conservatorship thesis as FNMAS but with different risk/reward math due to the higher par value. A core holding for GSE preferred investors.
FMCKPSuspended (speculative upside)
Federal Home Loan Mortgage Corporation (Freddie Mac)
FMCKP is the Series Z preferred stock of Freddie Mac, another $50 par preferred that trades alongside FMCKJ as one of the most actively traded GSE preferred securities. The Series Z has a slightly different coupon structure than Series K, but the investment thesis is fundamentally the same: this is a bet on GSE housing finance reform that includes making preferred shareholders whole.
One of the most liquid Freddie Mac preferred series. The $50 par value and suspended dividend create a binary outcome profile that attracts sophisticated investors betting on GSE reform.
FNMATSuspended (speculative upside)
Federal National Mortgage Association (Fannie Mae)
FNMAT is the Series T preferred stock of Fannie Mae, carrying a $25 par value and a fixed coupon rate. Like FNMAS, it is a direct play on the GSE recap-and-release thesis, but with a different coupon structure that creates a distinct risk/reward profile.
A popular Fannie Mae preferred with a $25 par value and strong retail investor following. Same GSE thesis as FNMAS with a different coupon structure.
FNMFNSuspended (speculative upside)
Federal National Mortgage Association (Fannie Mae)
FNMFN is one of the more junior Fannie Mae preferred series, which means it carries higher risk but also potentially higher reward in a recap-and-release scenario. The series has a lower coupon than some of the senior preferreds, which has historically caused it to trade at a deeper discount to par.
A junior Fannie Mae preferred that offers deeper discount to par and higher potential returns in a positive resolution. For investors with the highest conviction on the GSE thesis.
JPM-PD~5.75%
JPMorgan Chase & Co.
JPMorgan Chase Series D preferred is one of the highest-quality preferred stocks available in public markets. Backed by the largest bank in the United States — with over $3.7 trillion in assets and a track record of navigating every financial crisis of the past two decades — JPM-PD offers institutional-grade credit quality with a yield that significantly exceeds Treasury bonds.
The gold standard of preferred stock credit quality. JPMorgan is the most consistently excellent bank in America, and its preferreds offer reliable income with minimal credit risk.
BAC-PB~6.00%
Bank of America Corporation
Bank of America Series B preferred offers a higher yield than JPMorgan preferreds, reflecting BAC's slightly higher risk profile and history. Bank of America required significant government assistance during 2008-2009 and spent the better part of a decade rebuilding its balance sheet and reputation under CEO Brian Moynihan.
Second-largest U.S. bank with strong capital ratios and a higher yield than JPMorgan preferreds. The yield premium compensates for BAC's more eventful history without materially increasing credit risk.
WFC-PY~5.63%
Wells Fargo & Company
Wells Fargo Series Y preferred offers solid yield from the fourth-largest U.S. bank. Wells Fargo's journey through the fake accounts scandal and subsequent regulatory consent orders has been painful for shareholders, but the bank has emerged with stronger compliance systems, a new management team under CEO Charlie Scharf, and a business that generates consistent earnings.
Fourth-largest U.S. bank with yield premium driven by regulatory overhang. The asset cap creates a potential positive catalyst when lifted. Strong earnings power supports dividend coverage.
T-PA~5.35%
AT&T Inc.
AT&T Series A preferred offers income from one of America's largest telecommunications companies. AT&T has gone through significant restructuring — spinning off WarnerMedia to create Warner Bros. Discovery — to refocus on its core telecom business. The result is a more focused company with less debt and more predictable cash flows.
Predictable telecom cash flows backing a solid yield. AT&T's restructuring has created a more focused, less leveraged company. The preferred offers reliable income from an essential-services business.
PSA-PH~5.60%
Public Storage
Public Storage Series H preferred is backed by the largest self-storage REIT in the world, with over 2,800 locations across 40 states. Self-storage is one of the most recession-resistant real estate sectors — demand increases during both economic expansions (people buy more stuff) and contractions (people downsize and need storage).
A-rated credit from the largest self-storage REIT. Recession-resistant business model with pristine balance sheet. One of the safest REIT preferreds available.
ALL-PH~5.10%
The Allstate Corporation
Allstate Series H preferred offers income from one of America's largest property and casualty insurance companies. Insurance companies generate 'float' — premiums collected before claims are paid — which provides a massive pool of investable capital. Warren Buffett has called float the engine that powers Berkshire Hathaway, and the same principle applies to Allstate.
Reliable income from a top-tier insurance company with strong float economics. Allstate's brand, distribution, and underwriting discipline provide a solid foundation for preferred dividend payments.
NLY-PF~6.95%
Annaly Capital Management
Annaly Capital Management is the largest mortgage REIT in America, and its preferred stocks offer some of the highest yields in the preferred stock universe. Annaly invests primarily in agency mortgage-backed securities — bonds guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae — and uses leverage to amplify the yield on these relatively safe instruments.
Highest-quality mortgage REIT preferred with an attractive yield. Agency MBS focus means minimal credit risk on the underlying portfolio. The yield premium compensates for interest rate sensitivity.
GS-PD~5.50%
The Goldman Sachs Group, Inc.
Goldman Sachs Series D preferred offers yield from the most prestigious investment bank in the world. Goldman's franchise in M&A advisory, capital markets, trading, and asset management generates diverse revenue streams that support strong capital ratios and reliable preferred dividend payments.
Yield from the most dominant investment bank in the world. Goldman's diversification into asset management and consumer banking has reduced earnings volatility while maintaining the franchise premium.
C-PJ~7.13%
Citigroup Inc.
Citigroup Series J preferred offers one of the highest yields among major bank preferreds, reflecting Citi's ongoing transformation under CEO Jane Fraser. Citigroup has been in a perpetual state of restructuring since the 2008 financial crisis, shedding international consumer businesses, simplifying its corporate structure, and investing in technology and compliance.
Highest yield among major bank preferreds. Citi's global franchise and earnings power support the dividend despite ongoing transformation challenges. The yield premium is compensation for execution risk.
NEE-PR~5.28%
NextEra Energy, Inc.
NextEra Energy is the world's largest utility company by market capitalization and the largest generator of wind and solar energy in the world. Its preferred stock offers income backed by one of the most predictable business models in corporate America — regulated utility earnings that are approved by state public utility commissions.
The world's largest utility with best-in-class renewable energy assets. Regulated cash flows provide strong preferred dividend coverage. Clean energy exposure adds a growth dimension to the income stream.
DUK-PA~5.75%
Duke Energy Corporation
Duke Energy Series A preferred offers income from one of America's largest regulated utilities, serving 8.2 million electric customers and 1.6 million gas customers across six states. Duke's regulated earnings provide a highly predictable base of cash flow that supports preferred dividend payments.
Rock-solid regulated utility with nearly a century of uninterrupted dividends. Duke Energy's monopoly territories and regulatory framework provide the earnings predictability that preferred investors require.
ET-PC~7.60%
Energy Transfer LP
Energy Transfer Series C preferred offers a high yield backed by one of the largest midstream energy infrastructure networks in North America. Energy Transfer operates approximately 125,000 miles of pipelines transporting natural gas, crude oil, NGLs, and refined products. The midstream business model is attractive because pipelines generate fee-based revenue that is less sensitive to commodity pr...
High yield from essential energy infrastructure. Energy Transfer's 125,000-mile pipeline network generates predictable fee-based cash flows. The yield premium reflects structural factors (leverage, ESG) rather than fundamental weakness.
AGNCN~6.88%
AGNC Investment Corp.
AGNC Investment Corp. is the second-largest agency mortgage REIT after Annaly, and its preferred stock AGNCN offers attractive income from a pure-play agency MBS portfolio. AGNC invests exclusively in agency mortgage-backed securities — bonds guaranteed by U.S. government agencies — which eliminates credit risk on the underlying portfolio.
Pure agency MBS exposure means zero credit risk on the underlying portfolio. AGNC's consistent preferred dividend payments through multiple rate cycles demonstrate the durability of the income stream.
USB-PH~5.50%
U.S. Bancorp
U.S. Bancorp Series H preferred offers income from what is often considered the best-managed regional bank in America. USB has consistently led the industry in efficiency ratio (the percentage of revenue consumed by operating expenses) and has generated peer-leading returns on equity for over two decades.
Best-managed regional bank in America with peer-leading efficiency and returns. Conservative culture and disciplined underwriting make USB one of the safest bank credits. Premium quality at a reasonable yield.
RNR-PF~5.75%
RenaissanceRe Holdings Ltd.
RenaissanceRe is one of the world's leading reinsurance companies, specializing in property catastrophe reinsurance — the business of insuring insurance companies against hurricanes, earthquakes, and other natural disasters. The company's sophisticated risk modeling and disciplined underwriting have produced industry-leading returns over decades.
World-class reinsurer with best-in-class risk modeling. RenaissanceRe's disciplined underwriting and decades of profitability provide strong support for preferred dividends.
SCE-PH~5.45%
SCE Trust VI (Southern California Edison)
Southern California Edison, a subsidiary of Edison International, serves 15 million people across Southern California. SCE-PH offers utility-grade preferred income from one of the largest electric utilities in the western United States.
Large regulated utility with improving wildfire risk profile. Grid hardening investments and AB 1054 protections have significantly reduced the tail risk that previously plagued California utility preferreds.
KIM-PM~5.25%
Kimco Realty Corporation
Kimco Realty is one of the largest owners of open-air, grocery-anchored shopping centers in the United States, with interests in over 500 properties. KIM-PM offers preferred income from a REIT whose portfolio is anchored by necessity-based retail tenants — grocery stores, pharmacies, home improvement stores, and discount retailers.
Grocery-anchored retail REIT with defensive tenant mix and investment-grade balance sheet. Necessity-based retail provides recession-resistant cash flows that support preferred dividends.
MS-PI~6.38%
Morgan Stanley
Morgan Stanley Series I preferred offers yield from the investment bank that has most successfully transformed itself into a wealth management-driven franchise. Under CEO James Gorman (and now Ted Pick), Morgan Stanley shifted its revenue mix from volatile trading to stable wealth and asset management, which now accounts for roughly half of revenue.
Transformed investment bank with wealth management stability. Morgan Stanley's revenue diversification has fundamentally changed its risk profile while the yield premium persists based on historical perceptions.
DX-PC~6.90%
Dynex Capital, Inc.
Dynex Capital is a smaller mortgage REIT that invests in agency and non-agency mortgage-backed securities. Its Series C preferred offers a high yield that reflects both the leverage inherent in the mortgage REIT model and Dynex's smaller scale compared to Annaly and AGNC.
High yield from an actively managed mortgage REIT with experienced leadership. The yield premium over larger peers compensates for smaller scale while the preferred dividend has been reliable.
FMCKISuspended (speculative upside)
Federal Home Loan Mortgage Corporation (Freddie Mac)
FMCKI is the Series I preferred stock of Freddie Mac, completing the representation of GSE preferreds in this ranking. With a $50 par value and a notable coupon rate, FMCKI offers yet another entry point into the GSE recap-and-release thesis.
Another entry point into the GSE preferred thesis with a $50 par value. Less liquid than FMCKJ/FMCKP but the same fundamental upside in a positive resolution scenario.
Why Preferred Stocks Belong in Your Portfolio
The capital structure advantage that most retail investors overlook — and the income potential that bonds cannot match.
Income That Comes First
Preferred dividends are paid before common stock dividends. If a company cuts its common dividend, preferred holders still get paid. This priority in the capital structure is the defining advantage of preferred stock — your income is senior to every common shareholder.
Higher Yields Than Bonds
Preferred stocks typically yield 1-3% more than bonds from the same issuer. The additional yield compensates for subordination to bondholders, but for investors focused on income rather than credit ratings, the extra yield is significant over time.
Par Value Anchors Price
Most preferred stocks have a par value ($25 or $50) that anchors the trading price. Unlike common stocks, which can swing wildly based on growth expectations, preferreds trade in a narrower range around par — providing more stability for income-focused portfolios.
Tax-Advantaged Dividends
Many preferred stock dividends qualify for the qualified dividend tax rate (15-20%) rather than the ordinary income rate (up to 37%). This tax advantage can significantly boost after-tax returns, particularly for investors in higher tax brackets.
Asymmetric Risk in Special Situations
Some preferred stocks — like the GSE preferreds — offer asymmetric risk/reward profiles where the downside is limited to the current trading price but the upside could be multiples of that price. These special situations are rare but can be portfolio-defining when they work.
Disclaimer
This ranking reflects Glen Bradford's personal analysis and investment convictions. It is not financial advice. Preferred stocks carry risks including dividend suspension, interest rate sensitivity, and potential loss of principal. The GSE preferreds are speculative instruments with binary outcomes. Do your own research and consult a financial advisor before investing.
Work With GlenFrequently Asked Questions
What is a preferred stock?
A preferred stock is a hybrid security that combines features of both stocks and bonds. Like bonds, preferred stocks pay a fixed dividend and have a par value. Like stocks, they represent equity ownership and trade on exchanges. Preferred dividends are paid before common stock dividends, giving preferred holders priority in the capital structure. If a company goes bankrupt, preferred holders are paid after bondholders but before common shareholders.
Why are Fannie Mae and Freddie Mac preferred stocks ranked so highly?
The Fannie Mae (FNMAS, FNMAT) and Freddie Mac (FMCKJ, FMCKP) preferred stocks represent one of the most debated investment theses in the market. Since 2008, these government-sponsored enterprises have been in conservatorship with dividends suspended. If the GSEs are released from conservatorship and preferred shareholders are made whole at par value, the potential returns are enormous — potentially 5-10x from current prices. Glen Bradford has been publicly advocating for GSE preferred shareholder rights for years. The speculative rating reflects the binary nature of the outcome.
What is the difference between cumulative and non-cumulative preferred stock?
Cumulative preferred stocks accrue missed dividend payments as a liability — the company must pay all missed dividends before resuming common dividends. Non-cumulative preferred stocks do not accrue missed payments — once a dividend is skipped, it is gone forever. Cumulative preferred stocks are generally considered safer because missed dividends create an obligation. Most bank preferreds are non-cumulative (required by regulators), while most REIT preferreds are cumulative.
How do interest rates affect preferred stock prices?
Preferred stocks are interest-rate sensitive, similar to long-duration bonds. When interest rates rise, preferred stock prices generally fall because newly issued preferreds offer higher yields, making existing lower-yielding preferreds less attractive. When rates fall, preferred prices rise. Fixed-to-floating rate preferreds offer some protection against rising rates because their dividend adjusts upward when benchmark rates increase.
What is the best preferred stock for income?
The best preferred stock for income depends on your risk tolerance. For conservative investors, JPMorgan (JPM-PD) and Public Storage (PSA-PH) preferreds offer reliable income from fortress-quality issuers. For higher yields, bank preferreds from Citigroup (C-PJ) and energy infrastructure preferreds from Energy Transfer (ET-PC) offer 7%+ yields. For speculative upside, the GSE preferreds (FNMAS, FMCKJ) offer potential returns far exceeding traditional income instruments, but with significant risk.
Can preferred stocks lose value?
Yes. Preferred stocks can lose value due to rising interest rates (which push prices below par), credit deterioration (which increases default risk), or dividend suspension (which removes the income component). In extreme cases like bankruptcy, preferred shareholders can lose their entire investment. However, preferred stocks generally exhibit less volatility than common stocks because the fixed dividend and par value provide price anchoring. The GSE preferreds are a notable exception, where prices have been highly volatile due to political and legal uncertainty.
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