Preferred Stock ETF
PFF - iShares S&P U.S. Preferred Stock Index
I recommend starting a long term position in PFF. This ETF has performed miserably over the last year or so due to it's high allocation in the financial services sector (see top holdings below). Although I don't believe financials have bottomed, I don't think they will go too much lower from here. PFF currently pays an annualized dividend of about 14% and has an expense ratio of less than .50%.
Go easy, we're still in a bear market that will probably last for most of 2009 if not longer. All I'm suggesting is that you start a small position of about 25% of whatever you consider a full position.
Top 10 Holdings
BAC (Bank of America Corporation) Cap Tr Ii Pfd
Citigroup Cap Viii Pfd
Freeport-Mcmoran Copper & Gold
J P Morgan Chase Cap Xi Pfd
Metlife Pfd
Natl City Cap Tr Ii Pfd
Public Storage Pfd
Schering Plough Cv
Usb Cap Xi Pfd
Wells Fargo Cap Iv Pfd
Profile
Todays Close: 22.92
Category: Large Cap Blend
Fund Family: iShares Trust
Net Assets: 1.02B
Fund Inception Date: 26-Mar-07
52wk Range: 14.10 - 46.10
YTD Return: -23.83%
Yield: 14.27%
Expense Ratio: 0.48%
Turnover Rate: 24%
What is a Preferred Stock?
A preferred stock is a class of ownership in a corporation that has a higher claim on the assets and earnings than a common stock. Preferred stocks generally have a higher dividend that must be paid out before dividends to common stockholders. The best way to think of preferred stock is that it's a financial instrument that has characteristics of both a bond and an equity.
Pros: Priority over common stockholders on earnings and assets in the event of liquidation. Higher, fixed dividend that's paid before common stockholders.
Cons: No voting rights, less potential for share price appreciation.
I recommend starting a long term position in PFF. This ETF has performed miserably over the last year or so due to it's high allocation in the financial services sector (see top holdings below). Although I don't believe financials have bottomed, I don't think they will go too much lower from here. PFF currently pays an annualized dividend of about 14% and has an expense ratio of less than .50%.
Go easy, we're still in a bear market that will probably last for most of 2009 if not longer. All I'm suggesting is that you start a small position of about 25% of whatever you consider a full position.
Top 10 Holdings
BAC (Bank of America Corporation) Cap Tr Ii Pfd
Citigroup Cap Viii Pfd
Freeport-Mcmoran Copper & Gold
J P Morgan Chase Cap Xi Pfd
Metlife Pfd
Natl City Cap Tr Ii Pfd
Public Storage Pfd
Schering Plough Cv
Usb Cap Xi Pfd
Wells Fargo Cap Iv Pfd
Profile
Todays Close: 22.92
Category: Large Cap Blend
Fund Family: iShares Trust
Net Assets: 1.02B
Fund Inception Date: 26-Mar-07
52wk Range: 14.10 - 46.10
YTD Return: -23.83%
Yield: 14.27%
Expense Ratio: 0.48%
Turnover Rate: 24%
What is a Preferred Stock?
A preferred stock is a class of ownership in a corporation that has a higher claim on the assets and earnings than a common stock. Preferred stocks generally have a higher dividend that must be paid out before dividends to common stockholders. The best way to think of preferred stock is that it's a financial instrument that has characteristics of both a bond and an equity.
Pros: Priority over common stockholders on earnings and assets in the event of liquidation. Higher, fixed dividend that's paid before common stockholders.
Cons: No voting rights, less potential for share price appreciation.
Labels: ETF, Hedge-Funds, High-Yield, Portfolio, Stocks
posted by Bruce Kelly at
3:42 PM
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