Raymond James Preferred B: A Steady Beacon in a Rising Rate Storm

Raymond James Financial’s 6.375% Depositary Preferred Stock Series B (RJF.PRB) has emerged as a compelling income play for investors navigating an era of rising interest rates. With a robust 6.34% current yield and a strategic structure that balances fixed-rate stability with future floating-rate upside, this preferred stock offers a rare combination of income security and adaptability. Let’s dissect why this instrument stands out in today’s market.

The Case for Immediate Income
At a time when traditional fixed-income instruments are under pressure from Fed rate hikes, RJF.PRB delivers a quarterly dividend of $0.3984375 per share, translating to an annualized yield of 6.34%. This is a stark contrast to the paltry returns of Treasury bills or short-term bonds. The next dividend, payable on July 1, 2025, is backed by Raymond James’ strong financial footing—its A- credit rating (Fitch, S&P) and A3 (Moody’s) reflect its ability to meet obligations even amid economic volatility.

The Floating Rate Advantage
While the fixed-rate period of 6.375% lasts until July 2026, investors should note the transition to a floating rate tied to three-month LIBOR. As rates continue to rise, this feature could provide an inflation hedge, ensuring the dividend adjusts upward in a higher-rate environment. This dual-phase structure makes RJF.PRB a hybrid instrument—offering certainty now and flexibility later.

Creditworthiness Meets Prudent Risk Management
Raymond James’ stable credit ratings (A-/A3) are critical to the security of this preferred stock. The firm’s balance sheet, bolstered by record net revenues of $6.94 billion in the first half of 2025 and capital ratios above regulatory thresholds, underscores its capacity to sustain payouts. While the non-cumulative feature means dividends aren’t guaranteed, the company’s history of consistent payments—evident in quarterly declarations like the February 21, 2025, dividend—suggests reliability.

Navigating Callable Risks
The stock is callable starting July 2024, but its current trading premium (+0.52% to liquidation value) signals investor confidence that Raymond James will not redeem it prematurely. Even if called, holders would receive the $25 liquidation preference per depositary share—a solid floor. This contrasts with callable bonds that often get called during rate dips, leaving investors scrambling for replacements. Here, the structure favors patient investors.

Why Act Now?
With yields on cash and short-term instruments still lagging behind RJF.PRB’s 6.34%, this preferred stock offers immediate income that outperforms safer alternatives. Moreover, the stock’s post-call stability and the impending floating-rate mechanism create a multi-year opportunity. As the Fed’s terminal rate approaches—and potentially retreats—this instrument’s dual-phase design positions it to thrive in both scenarios.

Conclusion: A Strategic Income Anchor
In an environment where yield is scarce and rates are climbing, Raymond James Preferred B stands out as a rare gem. Its combination of a compelling fixed-rate dividend, a future floating-rate kicker, and a credit-backed issuer makes it a must-consider for income-focused portfolios. Investors seeking stability without sacrificing upside should act swiftly—this is one preferred stock that’s worth locking in before rates shift further.

This article is not a recommendation to buy or sell securities but is provided for informational purposes. Always consult a financial advisor before making investment decisions.