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Prudential Financial, Inc. (PRU) is a global financial services company with more than $1.66 trillion in assets under management, offering its customers life and health insurance products, annuities, retirement-related services, and investment management. PRU has operations in the U.S., Asia, Europe, and Latin America.

The company ranks as the largest life and health insurer in the nation and is the tenth largest investment manager worldwide.

We are recommending the Prudential Financial 4.125% Junior Subordinated Notes due 09/01/60 (PFH). This is a preferred exchange traded security (known as a PET bond), which constitutes Tier 2 regulatory capital for the company. Distributions are considered cumulative interest payments and are taxed as ordinary income. However, payments can be deferred for one or more interest periods not to exceed five years for any single deferral period.

This issue can be redeemed at par plus accrued interest on 09/01/25 or any time thereafter. PRU reported 1Q 2021 adjusted net operating income of $1.665 billion or $4.11 per share, easily beating analysts’ $2.68 estimates.

Bottom line adjusted results soared 85% from a year ago on the heels of strong sales and net inflow trends. One of the big earnings drivers was PRU’s investment management arm, PGIM, which saw 12% growth in its assets under management. 

This PET Bond investment is suitable for low- to medium-risk tax-deferred portfolios. Buy at or below $26.25, which represents a current yield of 3.93% and a 2.83% yield to call.

Wells Fargo & Company (WFC) is a diversified, regional-based financial services institution with $1.95 trillion in total assets. The bank holding company provides consumer and commercial banking, investment management, and a full array of mortgage products and services, in addition to consumer and commercial finance.

The company has a relatively new management team in place, focused on improving earnings and profitability and strengthening internal controls. We are recommending Wells Fargo & Company 4.70% Fixed Rate, Series AA, Non-Cumulative Perpetual (WFC-A). This fixed rate preferred is callable on 12/15/25 or any dividend payment date thereafter, at par plus any declared and unpaid dividends.

Wells Fargo reported 2Q 2021 net income of $6.0 billion or $1.38 per share, topping analysts’ $0.97 estimates. Earnings largely benefited from a $1.6 billion decline in the loan loss provision, as WFC released reserves as expected pandemic-related losses never materialized.

Revenue of $20.3 billion was also ahead of analysts’ expectations of $17.8 billion. Credit quality remains resilient, although WFC indicates losses will potentially increase from relatively low levels by historical standards.

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. WFC’s senior debt is rated A2 by Moody’s and BBB+ by S&P. Buy at or below $26.35, which represents a current yield of 4.46% and a yield to call of 3.38%.