The Allstate Corp. 7.375% perpetual Series J preferred stock (ALL.P.J) recently yielded 6.87%. That represents an attractive rate for an issue that is suitable for low- to medium-risk income-focused portfolios, writes Martin Fridson, editor of Forbes/Fridson Income Securities Investor.

The security has been a steady performer over the past year, with its price remaining in a range of plus/minus 3.7% of the average price over that period. This preferred stock’s quarterly, fixed-rate, noncumulative dividends are qualified. That means they are taxable at the capable gains rate — 15% or 20%, depending on the holder’s tax bracket — rather than as ordinary income. The issue becomes callable at $25 on July 17, 2028.

Moody’s Baa2 rating could move down a notch to Baa3, but that would merely put it in line with Standard & Poor’s BBB-, which has a Stable outlook from the rating agency. In short, we expect this preferred stock to remain firmly in the investment grade category.

Allstate ranks among the largest personal lines insurance carriers in the United States. It provides Property & Casualty (P&C) Insurance ranging from Personal Auto and Homeowners Insurance to Power Sports coverage. Additionally, the company offers Life and Retirement Services, as well as Business Health and Benefits.

ALL writes consumer product protection coverage for appliances, consumer electronics, technical support plans, auto plans, and more. Business Health and Benefits offers Life, Accident, Critical Illness, Short-Term Disability, and other health insurance products, including Medicare Supplemental Insurance.

Recent financial results have been solid. In Q3 2024, Allstate beat consensus expectations on net premiums written, consolidated revenue, net investment income, and adjusted earnings per share. The stock market has given the company a hearty vote of confidence, boosting its share price by 37.4% through late 2024. That compared with a 25.9% gain for the S&P 500’s Insurance Group.

In summary, Allstate’s 7.375% preferred stock offers an appealing yield and strong prospects for stable price performance during 2025.

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