Terms

Series

Series J Non-Cumulative Perpetual Preferred Stock

Liquidation Preference

$1,000.00

Rate Type

Fixed

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

June 1, 2026

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Existing And Future Debt Obligations Of Csc, Any Future Senior Preferred Stock; Pari Passu With: Series A Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock; Senior To: Common Stock, Nonvoting 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

Prospectus Summary

The Charles Schwab Corporation is offering depositary shares (NYSE: SCHW PrJ), each representing a 1/40th interest in a share of its Series J Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $1,000 per underlying share (equivalent to $25 per depositary share) and $0.01 par value. The coupon rate was not set in this preliminary prospectus, but dividends accrue at a fixed rate per annum, payable quarterly in arrears on March 1, June 1, September 1, and December 1, commencing June 1, 2021. Critically, dividends are non-cumulative: if the board does not declare a dividend for any quarter, that payment is permanently lost and holders have no claim to recover it in future periods. The Series J sits senior to all common stock and junior preferred/common classes, and on parity with Schwab's eight existing preferred series (A, C, D, E, F, G, H, and I). It is junior to all of CSC's existing and future debt obligations — including approximately $13.6 billion of long-term debt as of December 31, 2020, plus an additional $4 billion of senior notes issued in March 2021. As a holding-company issuance, the Series J is structurally subordinated to creditors of Schwab's operating subsidiaries (principally Charles Schwab Bank, SSB), whose assets must first satisfy subsidiary-level claims before dividends can flow up to CSC. A regulatory capital call provision allows Schwab to redeem the entire issue within 90 days if a law or regulatory change causes the Series J to lose its 'additional Tier 1 Capital' qualification, at $25 per depositary share — potentially prior to the June 1, 2026 optional call date. The effective yield at par ($25) equals the stated fixed coupon (not yet set in this preliminary filing). Dividends qualify as 'qualified dividend income' for non-corporate U.S. holders taxable at a maximum 20% rate, provided the holder satisfies the required 60-day holding period within the 121-day window around the ex-dividend date; U.S. corporate holders are generally eligible for the dividends-received deduction under the same holding-period rules. The record date falls on the 15th calendar day before each quarterly payment date. The dividend stopper is triggered if Schwab fails to pay full dividends for the immediately preceding quarter: in that scenario, no dividends or repurchases may be made on common stock or other junior securities (with narrow carve-outs for stock-settled dividends and employee benefit plans), protecting Series J holders' relative seniority among equity claimants.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Schwab fails to pay full dividends on the Series J Preferred Stock for the prior quarter, it may not pay dividends on or repurchase common stock or other junior securities (with limited carve-outs), and may not repurchase parity preferred stock except proportionally alongside the Series J.

Other Preferreds from Charles Schwab Corp

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 68 (Strong)