When the federal government started bailing out the financial sector at this time last year, part of the package included wiping out the preferred shares of several large institutions and forcing others to issue preferred shares directly to the government, in the eyes of many, nationalizing them. The upshot for the preferred share market was an unmitigated disaster; the entire asset class was driven into the doghouse as investors feared their holdings would be next.

IN PICTURES: 20 Tools For Building Up Your Portfolio

It didn't help, either, that nearly the whole preferred share market is made up of financial offerings. As the crisis unfolded, preferreds took it on the chin from two directions: their own issuers' mismanagement and dubious government intervention. But lately there has been a strong recovery in the preferred share market. The financial system is again operating as it once did (with some notable exceptions) and the markets reflect an increasing global confidence on the part of investors that the worst is behind us.

But still there are questions and no shortage of doubts that all will weather the storm equally well. For those who harbor such apprehensions, we've gathered here a number of 'A' rated preferreds for your perusal.

Dividends from the Best Rated Banks
HSBC Holdings plc has a preferred share (NYSE:HCS) with an 8.125% coupon that currently yields 7.6%. The stock has rallied over 100% since bottoming in March of this year and now trades above par for the first time since September 2008.

HSBC is one of the world's largest financials, with a market cap in excess of $200 billion and operations in 80 countries on every continent. The preferreds are rated A1 by Moody's and A- by Standard & Poor's.

Spanish Banking Megalith
Santander Finance's 6.80% 'A' Series preferreds (NYSE:STD-A) yield 7.20% after rising over 250% from 52-week lows set in the first quarter of 2009. The company is another global player, headquartered in Spain with operations in Europe and Latin America and a market cap of $130 billion.

Santander's preferreds are rated A2 by Moody's and A- by S&P. The bank recently reported that thanks to the recent economic recovery, it's on track for double digit growth from its British operations.

Prudential plc's 6.50% perpetual preferreds (NYSE:PUK-A) now pay 7.6% and have outdone the competition in capital appreciation over the last six months, rising by a phenomenal 475%. S&P rates the shares A-. Prudential plc is a retail insurance provider based in England.

The Wrap
Preferred shares have been a volatile instrument over the last year, but these three issues offer income investors the additional advantage of being highly considered by the premier debt rating agencies. (To learn more, see A Primer On Preferred Stocks.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  6. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  7. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  8. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  9. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  10. Professionals

    Tips for Helping Clients Though Market Corrections

    When the stock market sees a steep drop, clients are bound to get anxious. Here are some tips for talking them off the ledge.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!