Preferred Stock

Why invest in Preferred Stock

Preferred shares represent an ownership in company. They behave more like bonds and pay a fixed dividend payment which does not change during the life if the share. In case of bankruptcy the preferred shares have a higher claim than equity owners. Often used as an Income Stream because they usually pay a higher dividend than common stock , experience  less volatility than common stock . Interest rate  movement  affects the price of preferred share like bonds and do not fully participate  when the underlying company appreciate in value. There are several kinds of preferred shares and one needs to understand the differences and features of each before investing.

Key indicators to consider before investing

  • Interest Rate

Top 5 ETF’s in sector by Market Capitalization

Name of the Fund Ticker Symbol /Total AUM* Year of Inception Expense Ratio
 iShares S&P US Preferred Stock Index  PFF  03/26/2007  0.47%
 Power Shares Preferred Portfolio   PGX  01/31/2008  0.50%
 PowerShares Financial Preferred Portfolio  PGF  12/01/2006  0.63%

PowerShares Exchange-Traded Fund Trust II 

 VRP

 05/01/2014  0.50%
 SPDR Wells Fargo Preferred Stock  PSK  09/16/2009  0.45%

 

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