Federal National Mortgage Association 4.75% Perpetual Preferred Stock

Federal National Mortgage Association 4.75% Perpetual Preferred Stock represents a class of equity security issued by the Federal National Mortgage Association, commonly known as Fannie Mae. The primary purpose of this asset is to provide investors with regular income through dividends, set at a fixed rate of 4.75%, which is attractive to income-focused investors. This preferred stock does not have a maturity date, thus it is termed 'perpetual,' offering a theoretically indefinite expectation of dividend payments. This asset plays a crucial role in supporting Fannie Mae's capital structure by strengthening its equity base without diluting common shareholders. As a government-sponsored enterprise, Fannie Mae significantly impacts the housing finance sector by purchasing and guaranteeing mortgages, which helps maintain liquidity and stability in the housing market. However, owning preferred shares also comes with risks, including sensitivity to interest rates and the issuer's creditworthiness. In the broader financial market, preferred stocks like Fannie Mae's are often considered hybrid securities, possessing characteristics of both bonds (regular income) and stocks (equity ownership). They are particularly pertinent to financial institutions and pension funds aiming to balance risk and return in their portfolios.