It's rare to find a double-digit
. It's especially rare to find this sort of yield from one of the
world's largest companies.
Here in the United States, you'd be lucky to get 6% from
preferred stock in a blue-chip company. The
iShares S&P U.S. Preferred StockIndex (NYSE:
exchange-traded fund (
that invests in the preferred stock of S&P 500 companies, only
But it's a different story with international companies.
For example, the preferred stock I'm going to tell you about
belongs to one of the largest financial institutions in the world.
It has branches all over Latin America, the United States and
Recently, the stock has been punished because it's headquartered
in one of Europe's most troubled areas: Spain.
Mention an investment in a Spanish company to most people, and
they'll give a quick "no thanks." But in this case, that's
Despite the company's location, these
are isolated from the European debt crisis, they're safer than
general common stock, and right now they're paying an above-average
I'm talking about
Santander Preferred E (NYSE:
-- preferred stock in one of the world's largest financial
Banco Santander (NYSE:
And while the shares are available here on the New York Stock
Exchange, Madrid-based Banco Santander is actually the largest bank
in the euro zone. It's the European equivalent of
Wells Fargo (NYSE:
Lately, common shares in Santander have taken a beating.
Anything associated with Spain -- especially its banks -- is being
sold. But while investors are painting all Spanish banks with
the same brush, Santander is in solid financial shape.
For one, Santander has a far more conservative
than its Spanish peers. As of the end of the first quarter, Spanish
loans were just 111% of total deposits, down from 178% in
It also has significant geographical
. Only 12% of the bank's profits come from Spain and 1% from
Portugal. Meanwhile, 27% of its profits were generated in Brazil,
13% in Mexico, 10% in the United States and 13% in the
As a whole,
are now more important to Santander's profitability than mature
for 56% of total profits.
And while Santander is on solid financial footing relative to
most Spanish banks, the Santander Preferred E shares carry even
lower risks than the common stock.
From time to time, Santander has resorted to paying dividends on
its common shares in the form of additional shares rather than cash
to conserve money, but that's not possible for the preferreds. The
company cannot eliminate or delay making scheduled preferred
payments without eliminating its common dividends entirely.
That makes it likely that even if Spain requires further
assistance from the European Union, Santander will continue to pay
the $0.66 quarterly distribution to holders of the preferred E
At today's price of $26.20 a share, this means you can own
preferred stock in one of the world's largest banks, and secure a
10%-plus dividend yield.
Wells Fargo Preferred Stock (NYSE:
-- an ETF that owns preferred stock in some of the largest banks in
the United States -- only pays 6.2%.
Risks to Consider:
Of course, this stock isn't without risk. The European debt
crisis is still in full force, and until things get resolved, you
can expect volatility if the
hits a rough patch.
Action to Take -->
But stocks like Santander just show you the kind of opportunities
available to income investors who are willing to invest in the
-- Paul Tracy
P.S. -- If you'd like more information about international
dividend payers, make sure to read my latest research on the
subject here. In my report, I've given you the names and ticker
symbols of some of my favorite high-yield international stocks
right now. Click here to learn about these stocks now.
Paul Tracy does not personally hold positions in any securities
mentioned in this article. StreetAuthority LLC owns shares of
SAN-PE, WFC in one or more if its "real money" portfolios.
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