There Is Now a Way to Collect 6.25% From Google. It Stops Paying in 2029

Alphabet Inc. (GOOG, GOOGL) has introduced a new income security, GOOGM and GOOGN, offering a 6.25% annual coupon. These securities are the first of their kind issued by Google and will automatically convert to GOOGL shares in 2029. The securities provide a fixed income stream, but the upside is capped at that conversion point. With Google's stock up 71% over the past year, the conversion price limits further gains.

Currently, GOOGM is trading at $49.03 per depositary share, representing one-twentieth of a preferred share. The running yield depends on the purchase price. While the 6.25% coupon is above the 10-year Treasury yield of 4.63%, the security's conversion in 2029 caps the upside. Income investors seeking defined exposure to Alphabet with a 6.25% coupon may find GOOGM appealing, but those expecting uncapped AI upside might prefer the common stock.