Terms

Series

Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series I

Liquidation Preference

$25.00

Coupon Rate

5%

Rate Type

Fixed

Annual Dividend

$1.25

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

December 1, 2024

First Call Price

$25.00

Redemption Notice Period

15 days

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness And Other Non-Equity Claims On Capital One, Any Future Senior Preferred Stock Issued With Requisite Holder Consent; Pari Passu With: Each Other Series Of Preferred Stock (Series A Through H And Any Additional Parity Series); Senior To: Common Stock, Any Other Junior Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.025

Shares Offered

60,000,000

Prospectus Summary

Capital One Financial Corporation (NYSE: COF) is offering 60,000,000 depositary shares, each representing a 1/40th interest in a share of its Series I Fixed Rate Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $25 per depositary share ($1,000 per underlying share). The stock pays a fixed 5.00% annual coupon ($0.3125 per depositary share quarterly), with dividends first payable December 1, 2019 and callable at par beginning December 1, 2024. Critically, dividends are non-cumulative: if the Board does not declare a dividend for any period, that payment is permanently forfeited and Capital One has no obligation to make it up in future periods. The Series I Preferred ranks senior to Capital One's common stock and on parity with its seven existing preferred series, but is junior to all debt and other non-equity obligations of Capital One (approximately $317.9 billion in total liabilities as of June 30, 2019). Because Capital One is a holding company, the Preferred Stock is structurally subordinated to depositors and creditors of its bank subsidiaries (COBNA and CONA); dividends depend on the banks' ability to upstream funds. A regulatory capital call provision allows Capital One to redeem the full issue within 90 days if a change in law or regulation causes it to lose Tier 1 capital treatment — a meaningful risk given the Basel III framework under which this security qualifies. At the $25 offering price, the Series I Preferred yields exactly 5.00%. Dividends are paid quarterly on March 1, June 1, September 1, and December 1, with a record date set 15 calendar days before each payment date. Distributions are expected to qualify as 'qualified dividend income' for non-corporate holders (taxed at the 15%/20% preferential rate) and for the dividends-received deduction for corporate holders, provided Capital One has sufficient current or accumulated earnings and profits — though this is not guaranteed in future years. The dividend stopper blocks payments on common stock and junior securities if Preferred Stock dividends have not been paid in full, but since the preferred itself is non-cumulative, a missed preferred dividend does not automatically trigger any payment obligation.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Capital One has not paid full dividends on the Preferred Stock for the preceding period, it is blocked from paying dividends on or repurchasing common stock and other junior stock (subject to limited exceptions), and from repurchasing parity stock; similarly, dividends on parity stock cannot be paid unless Preferred Stock dividends are also paid or set aside.

Other Preferreds from Capital One Financial Corporation

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 46 (Average)