"Preferred" Favorites In Financial Services

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Brighthouse Financial, Inc. (BHF) is a major U.S. provider of annuities and life insurance. The company is one of the nation’s largest life insurers.

BHF was created by MetLife (MET) in August 2017 in line with MET’s business objective of separating a substantial portion of its U.S. retail life and annuity business from the main company.

Brighthouse has strong insurance subsidiary claims-paying ratings, namely, Moody’s, S&P, Fitch, and A.M. Best ratings of A+, A3, A, and A, respectively.

The bank reported 4Q 2020 adjusted net income of $272.0 million or $3.03 per share, easily beating analysts’ $2.73 estimates. Moreover, adjusted net income advanced 23.2% from a year earlier. Adjusted operating revenues of $2.54 billion also topped expectations, helped by continued solid sales growth in the annuities and life businesses.

We are recommending the Brighthouse Financial, Inc.; 6.75% Fixed Rate, Non-Cumulative Perpetual (BHFAO). This preferred is callable at par, on or anytime following the 06/25/25 call date. Dividends on this preferred issue are qualified and taxed at the 15%-20% rate.

This investment is suitable for low- to medium-risk taxable portfolios. Despite the Ba1 preferred rating by Moody’s, we are positively disposed, given the ‘A’ category claims paying ratings at BHF’s insurance subsidiaries. Buy at $27.75 or lower for a 6.08% current yield and 3.99% yield to call.

CNB Financial Corp. (CCNE) is a community bank holding company with $4.5 billion in total assets, serving markets in northwestern Pennsylvania, central Ohio, and Buffalo, New York.

CCNE has 45 full service banking offices and a non-bank financial services subsidiary that offers personal loans for auto purchases, bill consolidation, education and home improvements.

The company provides commercial and industrial banking services; consumer lending; credit card products, including merchant processing; treasury services; private banking; and wealth management.

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