Preferred Stock Value Calculator: Estimate Investment Worth Instantly
Divide the annual dividend by your required return to price a perpetual preferred share. Example: $2.75 ÷ 6 % = $45.83. U.S. preferred yields averaged 6.57 % in 2022 (ICE BofA Preferred Securities Index, https://indices.theice.com).
Preferred Stock Value Calculator
Preferred Stock Value:
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How to use the tool
1. Enter the yearly dividend—try 2.75 USD or 5.10 USD.
2. Type the discount rate, e.g., 6% or 9.2%.
3. Hit “Calculate” to display the stock’s fair value.
4. Adjust inputs to test different market scenarios.
Average U.S. preferred yield: 6.57 % in 2022 (ICE BofA Preferred Securities Index, https://indices.theice.com).
Standard par value: $25 per share (FINRA, https://www.finra.org/investors/learn-to-invest/types-investments/stocks/preferred-stock).
Straight preferreds have no maturity date (Investopedia, https://www.investopedia.com/terms/p/preferredstock.asp).
Dividend payments are usually quarterly (SEC Investor Bulletin, https://www.sec.gov/oiea/investor-alerts-bulletins/ib_preferredstock).
FAQ
What does the calculator measure?
The calculator estimates the intrinsic price of a perpetual preferred share by capitalizing its fixed dividend (SEC Investor Bulletin, https://www.sec.gov/oiea/investor-alerts-bulletins/ib_preferredstock).
How do I pick an appropriate discount rate?
Use your required return, often the yield on comparable preferred issues plus a company-specific risk premium (Damodaran, 2023, https://pages.stern.nyu.edu/~adamodar).
Why does the value fall when the discount rate rises?
A higher required return reduces the present value of each dividend, so price moves inversely to discount rate (Brealey & Myers, 2020).
Does the tool handle callable or convertible features?
No. It assumes a straight, non-callable, non-convertible issue; option features require additional modeling (Morningstar, https://www.morningstar.com).
How often should I update the inputs?
Re-calculate whenever market rates shift by roughly 25 basis points or company credit outlook changes (Moody’s, 2022).
Is the dividend figure gross or net of taxes?
Input the gross dividend declared by the issuer; tax effects vary by investor jurisdiction (IRS Pub. 550, https://www.irs.gov).
Can inflation influence the discount rate?
Yes. Rising inflation typically pushes interest rates higher, lifting required returns for preferred stock (Federal Reserve FRED, https://fred.stlouisfed.org).
What if the market price differs from the calculated value?
Market prices reflect supply, demand, and liquidity; intrinsic value guides long-term expectations but does not predict short-term trading levels (CFA Institute, 2022).
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