Tag - preferred stocks

Advice to the Advisors

Sheaff Brock Institutional Group | Investment portfolios | Preferred Income Portfolio | portfolio workhorse

Harnessing Twin Risks can Turn Preferreds into Portfolio Workhorses

In any income portfolio, two “bug-a-boos” are credit risk and call risk. When it comes to preferred stocks, interest-yield-hungry investors tend to over-emphasize the former, even as they devote less than due attention to the latter, observes Sheaff Brock Senior Portfolio Manager JR Humphreys. “Investors in search of solid income from their portfolios often select preferred stocks rather than Treasury securities or ETFs based on Treasury bonds. One reason behind this decision is that preferred stocks generally pay dividends of [...]

Advice to the Advisors

Sheaff Brock | Preferred Stock portfolio strategy | cat between dogs

There’s a Method to Dealing with Preferreds

Think of preferred stock as “middlers,” Sheaff Brock Senior Portfolio Manager JR Humphreys advises. Preferred stocks are income enhancers, yes, but they may have a higher return potential than bonds. At the same time, preferreds don’t act like other stocks, and, in fact, can carry less risk than their common cousins. In speaking with our Institutional editor, Humphreys outlined the five basic considerations he uses in the selection process when building a preferred portfolio: Liquidity—Many preferred issues are small, making [...]

Advice to the Advisors

Sheaff Brock preferred income portfolio strategy - preferreds may perform well in rising interest rate environments

In a Rising Interest Rate Environment, Preferreds are Particularly Apropos

“We find preferred securities attractive today from fundamental, technical and valuation perspectives,” Nuveen’s Doug Baker and Brenda Langenfeld commented back in December, citing preferred securities’ “history of lower sensitivity to rising interest rates.” “Preferred securities are often more sensitive to changes in credit spreads than other types of bonds. So on a relative basis they may perform well during periods of gradually increasing interest rates,” the Nuveen authors explain. And, while “it may seem counterintuitive to expect an asset class [...]

Advice to the Advisors

preferred portfolio strategy preferred stocks rising interest rates Sheaff Brock Institutional Group

Preferreds Continue in a Starring Role

In the ever increasing search for income, preferred stocks continue to play an important role for companies and investors alike, with the Standard and Poor’s Preferred Index ETF (iShares: PFF) trading at an average share volume of 2.3 million/day as of May 23, 2017. By way of quick review, preferreds are hybrid securities, blending traits of both stocks and bonds. Like common stock, preferreds represent ownership in a company, but without voting privileges; like bonds, preferreds are issued at a [...]