Dividends4Life: Preferred Stock Plays With 5%-Plus Yields

Preferred Stock Plays With 5%-Plus Yields

Posted by D4L | Sunday, September 14, 2014 | | 0 comments »

Preferred stock is a great tool for income investors who are looking for dividends but are leery of the bond market. After all, it’s almost certain the Federal Reserve will raise rates in the next year or so, given the modest pace of inflation and the continued downward march in the unemployment rate. And if rates rise, bonds could take a hit — but preferred stock could remain insulated thanks to its high yield.

Preferred stock is considered by many to be halfway between a bond and a stock. It is similar to a bond in that preferred stock has low volatility and (usually) a fixed rate. Meanwhile, preferred stock is similar to common stock in that it still comes after bondholders and debt obligations in the event of bankruptcy, and while less volatile than common stock, it does have the ability to move up (or down) on a share-price basis over time. If you’re interested in using preferred stock as a way to find big income, here are five funds that focus on preferred shares that will give you 5% yields or better: iShares U.S. Preferred Stock ETF (PFF), Global X SuperIncome Preferred ETF (SPFF), Nuveen Preferred Securities Fund (NPSAX), Market Vectors Preferred Securities ex-Financials (PFXF) and PowerShares Preferred Portfolio (PGX).

Source: InvestorPlace

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