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InfraCap REIT Preferred ETF: REIT Preferred Shares ETF With A 6.2% Yield

Published Mon, 14 Jan 2019 19:29:57 -0500 on Seeking Alpha

I recently had a chat with Jay Hatfield, the CEO of Infrastructure Capital Management, and manager of AMZA, the InfraCap MLP ETF. Just before our conversation, I noticed he also manages the much smaller InfraCap REIT Preferred ETF (NYSE: PFFR). The fund seemed interesting, so I did some research, asked him a few questions and reached an opinion. PFFR offers investors a strong, and safe, 6.2% dividend yield, albeit little opportunity for growth or capital appreciation. As such, it is an ideal investment choice for income investors.
Fund Overview
PFFR is an index ETF, administered by Infrastructure Capital Advisors, which exclusively invests in REIT preferred shares. The ETF tracks the Indxx REIT Preferred Stock Index. It is, as per management comments and my own research, the only fund which specializes in these investments. It is also a relatively young fund, it was only created in 2017.
Preferred shares are a hybrid security, exhibiting characteristics typical of both equity and fixed income securities. Like fixed income securities, preferred shares almost always offer higher dividend payments/yields when compared to common shares, and PFFR is no exception:
PFFR Dividend Yield (NYSE: TTM) data by YCharts
Preferred shares, and their dividends, are senior to common shares, and they are also cumulative in the event of non-payment, so preferreds are generally the safer, less volatile investment choice. PFFR is, once again, no exception:
PFFR 30-Day Rolling... Read more


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