Citigroup Capital Series XIII is a unique preferred stock issue that is currently yielding 10%. This is much higher than the typical yield of 6-7% for preferred stocks from other large banks.
Citigroup Capital Series XIII is a special type of preferred stock called a trust preferred security (TruPS). TruPS are a type of hybrid security that combines the features of debt and equity. They are treated as debt for tax purposes, but they have equity-like characteristics, such as the potential for higher dividends.
Citigroup Capital Series XIII was issued in 2009 to the US Treasury Department as part of the Troubled Asset Relief Program (TARP). The TARP was a government program that was designed to stabilize the financial system during the financial crisis.
The Treasury Department sold Citigroup Capital Series XIII to the public in 2010. The proceeds from the sale were used to repay the TARP loan that Citigroup had received.
Citigroup Capital Series XIII is a good investment for investors who are looking for a high-yielding security. However, it is important to remember that TruPS are a type of hybrid security and that they carry more risk than traditional preferred stocks.
Here are some of the risks of investing in Citigroup Capital Series XIII:
- The potential for higher dividends also means that there is a potential for higher losses if Citigroup Capital Series XIII does not pay dividends.
- TruPS are considered debt for tax purposes, which means that investors will have to pay taxes on the dividends that they receive.
- TruPS are more illiquid than traditional preferred stocks, which means that it may be more difficult to sell them if you need to get your money out quickly.
Despite these risks, Citigroup Capital Series XIII can be a good investment for investors who are looking for a high-yielding security. However, it is important to do your research and understand the risks before investing.