Should You Prefer Preferreds? – iShares S&P US Pref Stock Idx Fnd (ETF) (PFF), John Hancock Preferred Income Fund (HPI)

The Foolish takeaway

Preferred stock offers investors a convenient blend of debt and equity characteristics.  For investors who rely on income from their investments, preferred stock funds such as these provide dependable income with yields greater than both stocks and bonds in the current environment.

Preferred stock holds a superior position to common stock on the capital structure, and can allow for more capital gain potential than bonds.  For investors under-allocated to the financial sector who don’t want to outright buy bank stocks, these funds might be perfect for you.  Each of these funds has shown reliable performance and offers compelling yields in an investing environment of historically-low interest rates.  If you’re sick of earning almost nothing from savings accounts and certificates of deposit but don’t want to expose yourself to the same level of risk of the stock market, preferred stock funds such as these should be on your list.

The article Should You Prefer Preferreds? originally appeared on Fool.com and is written by Robert Ciura.

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