Preferred Stocks and Preferred Income Funds Offer High Yields

A preferred stock trades like a stock but offers income like a bond. Preferreds are attractive because their yields are usually higher than corporate bonds of similar credit ratings. And preferred dividends are taxed at a lower rate than corporate bonds. Like bonds, preferred stocks usually trade in a narrow price range, but they can experience significant prices declines.

You can find information about specific preferred stocks at QuatumOnline, a free site. Or check with your broker.

In addition to individual preferred stocks, you can invest in convenient closed-end funds and exchange-traded fund that feature preferred stocks.

Here is a sample of 8 preferred income closed-end funds.

Preferred Income CEFs
Stock	Price Quote & Dividend	Interactive Price Chart	10-Year Moving Average	Dividend Growth Rate & Chart	Return Calculator	Return Map
BlackRock Credit Allocation Income Trust IV	BTZ	Chart	Chart	Chart	Table	Map
Flaherty & Crumrine Preferred Income Fund	PFD	Chart	Chart	Chart	Table	Map
Flaherty & Crumrine Preferred Income Opportunity Fund	PFO	Chart	Chart	Chart	Table	Map
John Hancock Preferred Income Fund	HPI	Chart	Chart	Chart	Table	Map
John Hancock Preferred Income Fund II	HPF	Chart	Chart	Chart	Table	Map
John Hancock Preferred Income Fund III	HPS	Chart	Chart	Chart	Table	Map
Nuveen Quality Preferred Income Fund 2	JPS	Chart	Chart	Chart	Table	Map
Nuveen Quality Preferred Income Fund 3	JHP	Chart	Chart	Chart	Table	Map

To follow the day-to-day progress of the Preferred Income CEFs portfolio, check out the returns table and chart below. Dollar values are computed using weekly closes for stocks from Yahoo! Finance.

The 7 stocks included in the value computations are: PFD, PFO, HPI, HPF, HPS, JPS and JHP. The current value of the portfolio assumes that $1,428.57 was invested (total of $10,000) in each stock at its closing weekly price for the first week of January 2004. BTZ was excluded from the chart computations because of insufficient price data.

Preferred Income CEFs - Return Results
Portfolio:	Preferred Income CEFs
Start date:	Jan-02-2004
Start value:	$10,000
End date:	May-21-2013
End value:	$18,130
Number prices	491
Minimum value occurred on Oct-06-2008	$3,480
Maximum value occurred on May-06-2013	$18,197
Total gain or loss (Start date to End date)	81.30%
Annualized gain or loss (Start date to End date)	6.50%
Sharpe Ratio	0.56
Total dollar value on End date of a $10,000 purchase made on Start date	$18,130
Average percent return for all possible buy/sell combinations	22.92%
Number returns	120,295
Number profitable returns (Winners)	86,566
Percent profitable returns	71.96%
Number unprofitable returns (Losers)	33,729
Percent unprofitable returns	28.04%
Winners to losers ratio	2.57

Click chart to enlarge it.

Related Article

Preferred Exchange-Traded Funds (ETFs)
Preferred Stocks Deliver High Yields