Citigroup’s Preferred Holdouts May Gain 25 Percent

Citigroup Inc. investors who spurned last year’s offer to swap their preferred shares for common stock may reap gains of as much as 25 percent in three months if their dividend is restored.

Citigroup, which suspended dividends on four series of preferred stock in July 2009, could resume payouts under terms of the securities by Oct. 31, according to analysts David Hendler and Pri de Silva at CreditSights Inc. That may help the holdouts narrow the gap with peers who took the swap and have since quintupled their stakes as the common stock rose. The preferred shares tripled or quadrupled in the same period.