Stifel Financial Corp. (SF) is a St. Louis-based, global wealth management and investment banking company, notes dividend investing expert Marty Fridson, editor of Forbes/Fridson Income Securities Investor.
The firm's diversified financial services are offered through its primary broker-dealer subsidiary, Stifel, Nicolaus & Company, a full-service investment banking and brokerage institution.
The company provides its financial services across the retail sector, as well as to institutions and corporations. Acquisitions have played a major role in SF’s growth.
In the period from 2010 onward these have included Thomas Weisel Partners Group, Inc, resulting in the creation of one of the largest U.S. equity research platforms; Stone & Youngberg LLC, a specialist in municipal finance and fixed income securities; and the U.S. investment management unit of Barclays.
Our recommendation is for the Stifel Financial Corp.; 6.125% Fixed Rate, Non-Cumulative Perpetual (SF-C). The issue has a par value of $25.00 and a call date of 06/15/25 at $25.00.
This 6.125% preferred issue may be redeemed on June 15, 2025, or anytime thereafter, at par plus any declared but unpaid dividends. It has an annual cash dividend of $1.53125, for a current indicated yield of 5.52%.
SF reported 3Q 2020 adjusted net income of $120.5 million or $1.59 per share, exceeding analysts’ $1.33 estimates. Third quarter net revenue rose 7.5% to $883.3 million, reflecting increased client activity.
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Bottom line results rebounded from early 2020 on the back of much improved market conditions, leading to considerable higher asset prices.
In December SF increased its estimate 4Q 2020 operating net revenue from a range of $870-$920 million to $940-$970 million. We expect operating revenue and net results to maintain traction in 2021, as the economy continues its steady improvement.
Dividends on this preferred stock are qualified and taxed at the 15%-20% rate. This investment is suitable for medium-risk, taxable portfolios. Buy up to $27.90 for a 5.49% current yield and a 3.35% yield to call.