Equitable Holdings' Preferred Stock, Series A Shares Cross 6.5% Yield Mark

Equitable Holdings Inc.'s 5.25% Fixed Rate Noncumulative Perpetual Preferred Stock, Series A (EQH.PRA) traded with a yield exceeding 6.5% on Monday, notably below the 7.16% average for the "Insurance Brokers" preferred stock category. Concurrently, EQH.PRA was observed at an 18.52% discount to its liquidation preference, a wider discount than the 16.72% category average, while its noncumulative dividend feature remains a key consideration for investors.

Analysis

Equitable Holdings Inc.'s 5.25% Fixed Rate Noncumulative Perpetual Preferred Stock, Series A (EQH.PRA) traded with a yield exceeding 6.5% on Monday, based on an annualized dividend of $1.3125. This yield is notably below the 7.16% average for the "Insurance Brokers" preferred stock category. Shares also traded as low as $20.19, reflecting some intraday volatility.

EQH.PRA is currently trading at an 18.52% discount to its liquidation preference amount, which is a wider discount compared to the 16.72% average observed within the "Insurance Brokers" preferred stock category. A critical feature for investors is its noncumulative nature, meaning missed dividend payments are not required to be paid back before common dividends resume.

Despite the wider discount and lower yield relative to its category average, EQH.PRA traded flat on the day, while the common shares (EQH) experienced a slight decline of 0.1%. The persistent discount and noncumulative characteristic suggest a higher perceived risk or lower demand for this specific preferred issue compared to its peers, potentially influencing its valuation.

Key Decisions for Investors

• Investors should evaluate if the current yield of EQH.PRA (above 6.5%) sufficiently compensates for its lower return compared to the 7.16% category average.
• Consider the 18.52% discount to liquidation preference, which is wider than the 16.72% category average, as this may indicate higher perceived risk or a potential value opportunity depending on the investor's risk appetite.
• Account for the noncumulative dividend feature, as this increases risk for preferred shareholders in scenarios of financial distress, where dividend payments could be suspended without future recompense.