Are Preferred Stocks Making a Comeback?
Michael Albert submits: I noted in my last article that the market may be transitioning into defensive/lower beta equity sectors in anticipation of a broader equity correction in the near future. Specifically, looking at the performance of Consumer Staples (XLP), Healthcare (XLV), and Utilities (XLU), leadership does appear to be emerging on both up and down days. If there is a common theme across all three sectors, its that investors generally position into them not for the hope of substantial capital appreciation, but rather for the income and dividend component. If the pendulum is indeed swinging away from capital appreciation and more to dividend/income once again, its worth taking a look at the iShares S&P U.S. Preferred Stock Index ETF (PFF). Preferred stocks are somewhat of a hybrid between stocks and bonds, whereby shares are actually paid a guaranteed dividend. Preferred shares gets a first crack at a company's dividends, given their priorityComplete Story »
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