Why PG&E’s 4.36% Preferred Stock is a Safe Harbor in Rising Rates

In an era of climbing interest rates, investors are increasingly drawn to fixed-income securities that offer both stability and yield. Among these, Pacific Gas & Electric Company’s 4.36% First Preferred Stock (NYSE: PCG.PRI) stands out as a compelling opportunity. With an annualized dividend yield of 6.76%—nearly double the 10-year Treasury yield—and a track record of consistent payouts, this preferred stock is positioned to thrive in a tightening monetary environment.

A Yield to Rival High-Yield Bonds

The 4.36% First Preferred Stock currently trades at $16.12 (as of April 30, 2025), delivering an attractive 6.76% annualized yield based on its quarterly dividend of $0.2725 per share. While this yield lags slightly behind the Utilities sector’s average of 6.97%, it remains competitive, particularly given PG&E’s robust dividend history. Unlike volatile common stocks, preferred shares like PCG.PRI offer a fixed payout structure, shielding investors from equity market swings.

Dividend Stability Amid Past Volatility

PG&E’s preferred stock has demonstrated remarkable resilience. Despite suspending dividends on common stock from 2018 to 2023—a period marked by regulatory and financial crises—the 4.36% series maintained uninterrupted payouts since its resumption in 2024. This consistency underscores PG&E’s commitment to honoring obligations to preferred shareholders, who rank higher in priority than common equity holders.

Why Rising Rates Favor This Preferred Stock

In a rising-rate environment, preferred stocks with fixed coupons become increasingly valuable. The 4.36% coupon on PCG.PRI is locked in, meaning its yield-to-maturity will rise if broader rates climb, making the stock more attractive to income-seeking buyers. Unlike variable-rate preferreds, which could see payouts shrink in a rate hike cycle, this security’s fixed rate acts as a hedge.

PG&E’s utility business also benefits from rate-regulated operations, reducing earnings volatility. While energy demand fluctuates, the company’s regulated monopoly over Northern California’s power grid ensures steady cash flows to support dividends.

A Strategic Call to Action

The ex-dividend date for PCG.PRI’s May 15, 2025, payout was April 30, 2025, but the stock’s appeal remains intact. Investors who act now can secure a yield of ~6.8%, a rare find in today’s low-yield landscape. With the Federal Reserve signaling further hikes, the urgency to lock in fixed income is critical.

Risks to Consider

No investment is risk-free. PG&E’s past financial struggles—most notably its bankruptcy in 2019—lurk in investors’ memories. However, the company has since stabilized its balance sheet and resumed dividend payments. The preferred stock’s subordination to senior debt remains a caveat, but its fixed-rate structure and utility’s regulated earnings provide a solid foundation.

Final Verdict: A Dividend Dynamo for Defensive Portfolios

PG&E’s 4.36% First Preferred Stock offers a rare blend of high yield, dividend discipline, and rate-resistant cash flows. With its yield poised to gain further appeal as rates rise, this security is a must-consider for income investors. Act swiftly—rising demand could push prices higher, narrowing the yield opportunity.

In a market hungry for yield, PCG.PRI is more than a play—it’s a strategic anchor for portfolios navigating uncertain times.