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Get filing alertsSchwab issues $1.5B preferred stock with dividend restrictions on common shares
Filed April 22, 2026 · Period ending April 20, 2026 · ~1 min read
Key Changes
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Schwab sold 1.5M depositary shares of new 6.100% Series L Preferred Stock through major underwriters, raising capital that ranks senior to common stock for dividends and liquidation.
Item 8.01 verify on EDGAR → -
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If Schwab fails to pay preferred dividends, the company cannot pay common dividends, buy back shares, or make distributions on junior securities until preferred holders are paid—creating a payment hierarchy that could restrict capital returns during stress.
Item 5.03 verify on EDGAR → -
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The Series L Preferred is perpetual and non-cumulative (missed dividends don't accumulate), with a 6.100% fixed rate that will reset at a future date, providing permanent Tier 1 capital.
Exhibit 3.1 verify on EDGAR → -
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Each depositary share represents 1/100th interest in a Series L Preferred share, with proportional dividend, voting, redemption, and liquidation rights, making the security accessible to retail investors.
Item 5.03 verify on EDGAR →
Summary
Charles Schwab raised capital by issuing 1.5 million depositary shares representing its new Series L Preferred Stock, a 6.100% fixed-rate perpetual security sold through six major investment banks. This preferred stock sits above common shares in the capital structure, meaning preferred holders get paid first for dividends and in liquidation scenarios.
Common shareholders should understand the dividend restriction mechanism: if Schwab skips a preferred dividend payment, it cannot pay common dividends, repurchase shares, or make other distributions until the preferred obligation is satisfied. While this protects preferred investors, it could limit returns to common holders if the company faces financial pressure.
The non-cumulative feature means missed dividends don't pile up, but the restriction still applies period-by-period. Watch Schwab's quarterly dividend declarations closely. Any suspension of the preferred dividend would immediately signal financial stress and trigger restrictions on common stock capital returns. The 6.100% rate suggests Schwab is paying a meaningful premium for this permanent capital, which may reflect either market conditions or regulatory capital requirements for the brokerage and banking operations.
Section-by-Section Diff
Event · Item 3.03 — Material Modification to Rights of Security Holders
Item 3.03 — Material Modification to Rights of Security Holders filed; see Key Changes for terms.
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CSC filed a Certificate of Designations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware, establishing the voting rights, powers, preferences and privileges, and the relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of the Series L Preferred Stock on April 22, 2026.
Charles Schwab Corporation filed official documentation with Delaware establishing a new class of preferred stock called Series L Preferred Stock. This creates a new security with specific rights and preferences that will rank senior to common stock in the capital structure.
Added in current filing · verify on EDGAR →
Holders of the Depositary Shares will be entitled to all proportional rights and preferences of the Series L Preferred Stock (including dividend, voting, redemption and liquidation rights).
The Series L Preferred Stock will be offered through depositary shares, with each depositary share holder receiving proportional economic and voting rights of the underlying preferred stock, including dividends, voting power, redemption rights, and liquidation preferences.
Event · Item 5.03 — Amendments to Articles of Incorporation or Bylaws
Charles Schwab filed a Certificate of Designations creating a new Series L Preferred Stock class, effective upon Delaware filing.
Added in current filing · verify on EDGAR →
The Certificate of Designations became effective upon filing with the Secretary of State of the State of Delaware. The terms of the Series L Preferred Stock are more fully described in the Certificate of Designations which is included as Exhibit 3.1 to this Current Report on Form 8–K and is incorporated by reference herein.
Charles Schwab has created a new class of preferred stock designated as Series L Preferred Stock by filing a Certificate of Designations with Delaware. The specific terms, rights, preferences, and limitations of this new preferred stock series are detailed in Exhibit 3.1. This represents a change to the company's capital structure and authorized securities.
Event · Item 8.01 — Other Events
Item 8.01 — Other Events filed; see Key Changes for terms.
Added in current filing · verify on EDGAR →
On April 20, 2026, in connection with the Preferred Issuance, CSC entered into an Underwriting Agreement (the “Underwriting Agreement”) with Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, TD Securities (USA) LLC and Wells Fargo Securities, LLC, as the representatives of the several underwriters named therein (collectively, the “Underwriters”), under which CSC agreed to sell to the Underwriters 1,500,000 shares of Depositary Shares, each representing a 1/100th ownership interest in a share of Series L Preferred Stock.
Charles Schwab completed an underwritten public offering of 1,500,000 depositary shares, with each depositary share representing a 1/100th interest in a share of newly created Series L Preferred Stock. This means the company issued 15,000 actual shares of Series L Preferred Stock. The offering was conducted through six major investment banks acting as underwriters.
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The offering was made pursuant to the prospectus supplement dated April 20, 2026 and the accompanying prospectus dated December 1, 2023, filed with the Securities and Exchange Commission pursuant to CSC’s Registration Statement.
The preferred stock offering was conducted under an existing shelf registration statement from December 2023, with a new prospectus supplement dated April 20, 2026. This indicates the company had previously registered securities for potential future issuance and is now executing on that registration.
Show 1 minor / wording change
Added in current filing · verify on EDGAR →
The Underwriting Agreement contains customary representations, warranties and agreements of CSC, conditions to closing, indemnification rights and obligations of the parties, and termination provisions. Under the terms of the Underwriting Agreement, CSC agreed to indemnify the Underwriters against certain specified types of liabilities, including liabilities under the Securities Act of 1933, as amended, and to contribute to payments the Underwriters may be required to make in respect of these liabilities.
The underwriting agreement includes standard provisions where Schwab agrees to indemnify the underwriters against certain liabilities, including those under securities laws. This is typical for underwritten offerings and protects the underwriters from legal claims related to the offering documents.
Event · Item 9.01 — Financial Statements and Exhibits
Item 9.01 — Financial Statements and Exhibits filed; see Key Changes for terms.
Added in current filing · verify on EDGAR →
Certificate of Designations of 6.100% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series L, dated April 22, 2026, of CSC (including the form of 6.100% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series L Certificate of CSC attached as Exhibit A thereto).
Charles Schwab issued a new series of perpetual preferred stock (Series L) with a 6.100% fixed rate that will reset at a future date. This is non-cumulative, meaning missed dividends do not accumulate. The issuance provides the company with additional Tier 1 capital but dilutes existing equity holders and creates a new class of securities with priority over common stock for dividends and liquidation.
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Underwriting Agreement, dated April 20, 2026, by and among CSC and Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC, TD Securities (USA) LLC and Wells Fargo Securities, LLC, as the representatives of the several underwriters named therein.
The preferred stock was sold through a syndicate of major investment banks led by Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley, Wells Fargo, and TD Securities. This underwritten offering structure indicates institutional demand and provides immediate capital to Schwab, though the specific offering size and proceeds are not disclosed in this 8-K.
Show 1 minor / wording change
Added in current filing · verify on EDGAR →
Deposit Agreement, dated April 22, 2026, between CSC and Equiniti Trust Company, LLC, as Depositary (including the form of Depositary Share Receipt attached as Exhibit A thereto).
The preferred stock will be represented by depositary shares held by Equiniti Trust Company as depositary. This structure allows the preferred stock to trade in smaller denominations, making it more accessible to retail investors and improving liquidity in the secondary market.
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Figures/quotes linked to EDGAR · Narrative written by AI · Jun 2, 2026 · How we verify