CONSIDER SOME PREFERRED STOCKS FOR YOUR PORTFOLIO
PREFERRED STOCKS:
- A kind of hybrid security, sits between bonds and stocks in company’s capitalization structure
- Junior to bonds, but senior to common stocks in claims on assets
- Currently yield more than investment grade bond equivalents
- Bond interest is taxed at regular personal income tax rate
- Most preferred stock dividends taxed at lower long-term capital gains rate
Burt Malkiel’s: “The ‘Preferred’ Path to Higher Returns”
