Preferred Stocks Offer a Better Way to Bet on Banks

One normally staid corner of the financial markets—preferred stock—has been rattled by the Silicon Valley Bank and Signature Bank seizures, and that has created opportunities for investors.

Preferreds are a senior form of equity whose dividends come before those of common stock. Preferred shares issued by banks, however, account for about two-thirds of the $400 billion market and the twin bank failures have highlighted the credit risk in these securities.