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Preferred Securities: Rising Yields, Lower Prices Lead To An Attractive Entry Point

Published Wed, 21 Nov 2018 07:26:19 -0500 on Seeking Alpha

Preferred securities are beginning to look more attractive for long-term investors.
The rise in long-term Treasury yields so far this year has pulled down prices of preferred securities. While that has led to disappointing total returns in 2018, it has presented investors a more attractive entry point to earn higher yields. But preferred securities come with a unique set of characteristics, including greater risks, so it's important to understand all of the nuances before investing.
What are preferred securities? Preferred securities are a type of hybrid investment that shares characteristics of both stocks and bonds.
Like bonds, preferred securities have fixed par values and make scheduled coupon payments throughout the year. Preferreds often pay quarterly, however, while traditional bonds usually make semiannual payments. Preferred securities are often rated by credit rating agencies such as Standard and Poor's or Moody's Investors Service.
Like stocks, however, preferreds rank very low on an issuer's priority of payments, and the coupon payments are often discretionary, meaning they can be suspended without triggering a default, unlike a missed payment on a traditional bond. Preferred securities rank above an issuer's common stock. In order for a corporation to pay a common stock dividend, it first needs to make its payment to its preferred shareholders-hence the name "preferred."
Why are they attractive now?... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
COHEN & STEERS SELECT PREFERRED ANDOME FUND 29.26   0.0 0.00 0.00 7.08
FLAHERTY & CRUMRINE/CLAYMORE PREF SEC INCOME FUND 20.35   4.8 4.25 0.00 6.62
JOHN HANCOCK PATRIOT PREMIUM DIVIDEND FUND 17.91   0.0 0.00 0.00 6.55
FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND 21.51   0.0 0.00 0.00 6.34
FLAHERTY & CRUMRINE PREF INCOME OPP FUND 12.10   0.0 0.00 0.00 6.20
FLAHERTY & CRUMRINE PREFERRED INCOME FUND 15.23   0.0 0.00 0.00 6.01
ISHARES S&P US PREFERRED STOCK INDEX FUND 37.21   0.0 0.00 2.08 5.60
VANGUARD EXTENDED DURATION TREASURY ETF 137.28   0.0 0.00 0.00 2.29
SPDR BARCLAYS CAPITAL 1-3 MONTH T-BILL ETF  

COHEN & STEERS SELECT PREFERRED ANDOME FUND - PSF
COHEN & STEERS SELECT PREFERRED ANDOME FUND - PSF  


Older articles featuring Cohen & Steers Select Preferred Andome Fund (PSF):
FFC: 6.2% Yield From Leading Preferred Stock CEF
5 High-Yield Monthly Income Investments For 2014
Yielding 8.25% And Trading Below Book Value
CEF Weekly Review: ING Emerging Markets High Dividend
Monthly Income Ideas: 40 Closed-End Funds With 8% To 9% Yields (Part 6)
High Yielding CEFs With Strong Financials To Sustain Dividends
4 Strategies For Increasing Yield And 11 CEFs That Will Help You Profit

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