Saturday, March 21, 2015

How to Get Wells Fargo Bank to Pay You 6% on Your Money

Do you have an account at Wells Fargo Bank, or one of the other major banks? If you have a savings account, you are earning 0.01%. That is not one percent, it's not one tenth of a percent. It is one one hundredth of a percent! And this is being paid on what the bank calls its High Yield Savings account.

Of course, you can boost your yield all the way up to 0.50%; that's a half a percent. But you have to tie up your money for 58 months, which is almost five years.

So what are your other options? You can buy the Wells Fargo (WFC) stock, which pays a yield of 2.5%. But if you want a really high yield, you should consider the Wells Fargo 7.50% Non-Cumulative Perpetual Convertible Series L Preferred Stock (WFC-PL). The stock, which currently sells for $1,207 a share, pays $75 per share per year, giving it a current yield of 6.2%.

This preferred stock also has an upside kicker. It is convertible into 6.38 shares, which means that if the common stock rises above 189 per share, the preferred shares will move up above its current price. Obviously, the common stock is way below that price at 56 per share, but it is a benefit.

One other advantage that the preferred stock has over the common shares is that if the company goes out of business, the preferred shareholders are paid off before the common shareholders.

Here are the risks. First, the preferred stock isn't very liquid, with a trading volume of only five or six thousand shares a day. Second, and much more important, is the interest rate risk. When interest rates go up, the preferred stock will drop. If you are willing to accept the risk, this may be an investment option for you. If you like interesting stocks like this, check out the many free stock lists at

Disclosure: Author didn't own any of the above when the article was written.



Ghassan Alredmann said...

what is share ticker?
Can I buy it via online brokers

Stockerblog said...

Good question: The ticker is WFC-PL or WFC-L depending on the broker. Yes, you can buy it through an online broker.