Southern California Edison – SCE Trust VI

Ticker: SCE-PL, Buy below $24.

Southern California Edison is electric utility located in Southern California.

Why I Would Buy

  1. Yield – SCE-PL yields close to 6% at current prices.
  2. Cumulative – The ordinary shareholders of Edison will not receive any dividends until holders of this security are paid.   
  3. Qualified Dividends – A rarity among preferreds, the dividends of this security are eligible for 15% tax rate.
  4. Discount – Selling at a 15%+ discount to par.
  5. Strong Issuer – Parent company is Edison International, which is a large utility holding company.

What Could Go Wrong

  1. Perpetual – SCE-PL is a perpetual preferred security with no mandatory call-date.
  2. Credit Rating – The security is rated Ba1 / BB+ by Moodys and S&P, which puts it into non investment grade ratings.

Disclosure: I am long SCE-PL, please read additional disclosures here before taking any action based on this post.