Sunday, March 3, 2013

WSJ: When Preferred Securities Make Sense

By SIMON CONSTABLE

Investors seeking income might want to take a peek at preferred-stock funds.

What is preferred stock? It is a hybrid security that is a cross between equity and debt. Like debt, it pays a fixed amount of interest, and holders get paid before any common-stock dividends are distributed. But like equity, it tends to have larger price swings to both the upside and the downside.Buyers may reap handsome yields of around 6% with advantageous tax treatment on distributions. Still, you need to understand the nuances of preferred stock to get the most from it.  See original story here.

No comments: