First Horizon's Preferred Stock, Series B Shares Cross 6.5% Yield Mark

First Horizon Corp's 6.625% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series B (FHN.PRB) traded with a yield above 6.5% on Tuesday, based on its annualized dividend of $1.6562, while the average yield in the "Financial" preferred stock category is 6.68%. FHN.PRB traded at a 2.28% premium to its liquidation preference, compared to an average discount of 11.98% for the financial category; FHN.PRB was down about 0.1% while the common shares (FHN) were up about 1.5%.

Analysis

First Horizon Corp's 6.625% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series B (FHN.PRB) exhibited a yield exceeding 6.5% on Tuesday, derived from its annualized dividend of $1.6562. This yield is marginally below the 6.68% average for preferred stocks in the "Financial" category. Notably, FHN.PRB traded at a 2.28% premium to its liquidation preference amount, contrasting sharply with the average 11.98% discount observed across the broader "Financial" preferred stock category. A critical characteristic for investors to consider is the non-cumulative nature of these preferred shares, implying that any missed dividend payments are not recoverable by shareholders. On the trading day, FHN.PRB experienced a slight decline of approximately 0.1%, while First Horizon Corp's common shares (FHN) appreciated by about 1.5%, indicating a divergence in performance between the company's equity classes. The overall sentiment for the information is mixed, with a neutral tone, though FHN common stock carries a slightly positive sentiment score of 0.15.

Key Decisions for Investors

• Investors should assess whether FHN.PRB's yield, slightly below the financial sector preferred average, adequately compensates for its trading premium to liquidation value, especially when compared to the sector's average discount.
• The non-cumulative feature of the dividends is a significant risk factor; any suspension of payments would result in a permanent loss of that income for preferred shareholders, warranting careful consideration of First Horizon's financial stability.
• Consider the divergence in daily performance between FHN.PRB (down 0.1%) and FHN common stock (up 1.5%) in the context of overall portfolio allocation and relative value within First Horizon's capital structure.