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Preferred Shares: High-Yielding But Pricey

TedTed
edited August 2017 in Fund Discussions
FYI: (Click On Article Title At Top Of Google Search)


What’s not to love about preferred shares? These securities, which have characteristics of both bonds and stocks, pay yields of around 6%—more than the average junk bond—and are typically issued by large, well-capitalized, investment-grade-rated financial institutions. Payouts are usually taxed as qualified dividend income, allowing investors to keep more of what they earn.
There’s one problem, however: They are getting expensive....
Regards,
Ted
https://www.google.com/search?source=hp&q=Preferred+Shares:+High-Yielding+but+Pricey&oq=Preferred+Shares:+High-Yielding+but+Pricey&gs_l=psy-ab.3...4505.4505.0.6550.3.2.0.0.0.0.82.160.2.2.0....0...1..64.psy-ab..1.1.82.6..35i39k1.R5jU2DtHUO8

Comments

  • Last year I added Cohen & Steers fund CPXAX (load free and ntf at Fido) and have been happy with it, added to it on occasion.

  • The problem is that many people don't look at the par value of preferreds, just see the yield and pounce. Most savvy preferred investors will *rarely* buy a preferred trading more than one dividend payment above its call value (ie, $25).

    That said, I still refuse to own any 'non-cumulative' preferred stocks -- which frequently are issued by banks ... and what frequently is held by these preferred ETFs, too....so I don't hold any of them, either!
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