MetLife: A Preferred Play For Income Investors

MetLife, Inc. (MET) ranks among the largest global providers of insurance products and services, annuities, and employment benefit programs, notes Marty Fridson, editor of Income Securities Investor.

The company has operations in nearly 50 countries, with over 900 investment professionals around the globe serving individual and institutional clients. MET offers life, accident, and health insurance, as well as retirement and savings products through various distribution channels.

In March 2017 MET completed the spinoff of its U.S. retail business into a separate organization called Brighthouse Financial (BHF).

MET reported 1Q 2020 adjusted net income of $1.4 billion or $1.58 per share, up almost 7% from a year earlier. Results outpaced analysts’ $1.44 estimates. Operating revenue of $15.5 billion was flat from a year ago and missed estimates.

With interest rates very low all along the Treasury yield curve, MET’s profitability measures may be challenged this year. However, MET’s low leverage and strong capital position, which enabled the company to navigate through the 2008-2010 financial crisis, will serve it well during this cycle.

For income investors, we are recommending the MetLife 4.75% Fixed Rate Perpetual Preferred (MET-PF). The issue's par value is $25.00 and the annual cash dividend of $1.1875 provides a current indicated yield of 4.62%.

The preferred issue's call date is 03/15/25, for a yield to call of 4.09%. The issue is rated Baa2 by and BBB by S&P. The CUSIP number is 59156R850.

This preferred investment is suitable for low- to medium-risk taxable portfolios. Dividends are qualified and taxed at the 15%-20% rate. Buy up to $26.25 for a 4.52% annualized yield and a 3.58% yield to call.

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