Dividends4Life: 3 Preferred Stocks to Replace Low-Yield Bonds

3 Preferred Stocks to Replace Low-Yield Bonds

Posted by D4L | Tuesday, December 01, 2015 | | 0 comments »

I was speaking with a money manager the other day, and we were assessing interest rates and the situation with bonds. I wondered aloud why anyone would be holding bonds at this time, unless it was part of a long-term diversified portfolio, of which the bond portion is really just a place to park cash. He said, “I would not advise anyone to own bonds right now.” I completely agree. The only direction right now for interest rates is up, and only in tiny amounts, meaning they will not provide attractive returns for the foreseeable future. Moreover, increasing rates means a decline in bond value, so bond holders get slapped with capital losses.

That’s why preferred stocks have been my go-to income investment for several years. They behave just like bonds, but offer dividends of 5% to 9% without the associated downside risk to price. There is some risk, but not much. So, let’s look at three of the best preferred stocks for income-hungry investors: Ashford Hospitality Trust Series D Preferred (AHT-D), Bank of America Corp. Preferred I (BAC-I) and Prudential Preferred Series I (PUK-PI).

Source: InvestorPlace

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