On Thursday the markets basically held on to the big gains from Wednesday. The S&P 500 was down just 0.1%. Toronto was up 0.4%.
Today I bought some Wells Fargo Preferred Shares. I have not analysed these, but I do know Wells Fargo quite well.
These shares trade as WFC.PRO on New York. In Yahoo Finance the symbol is WFC-PO. Use caution as it may be hard to find the right trading symbol in your particular discount broker software. For TD Direct (Waterhouse) the symbol is WFC.PR.O. They are a perpetual share that pays U.S. $1.2812 per year on a $25 par value. They now trade at about $19.81 to yield almost 6.5%.
There shares are non-cumulative which means that if they miss a dividend it will not be made up later. That may be a large part of the reason for the discount.
Another reason for the discount is simply that long-term interest rates have risen since these shares were issued at $25.
As perpetual shares these would get absolutely hammered if long term interest rise a lot. So that may be a reason to avoid them.
But I figured the yield at close to 6.5% was attractive and I would take my chances. It seems to me that the entire decline from $25 to $19.80 is not justified by how far interest rates have gone up. If there are other temporary factors pushing the price down, then I would hope that will be in fact temporary.
I bought these in an RRSP account to avoid the 15% U.S. withholding tax that applies if Canadians buy these in most other types of accounts.
I don’t know if I will add these shares to the list above because I may not have enough information for an adequate analysis.