Preferred stock ETFs are taxed as common stock dividends. Companies that issue preferred shares must have healthy balance sheets and strength in the underlying business. It is up to investors to double check that the companies represented in an ETF index are sound. Likewise, an ETF can help mitigate the risk of an unhealthy company since the portfolio contains many. [Preferred Stock ETFs with High Yields]
The iShares S&P U.S. Preferred Stock Index Fund (NYSEArca: PFF) yields 5.71% and has $10.5 billion in assets. The ETF has suffered as the fiscal cliff fear has become stronger, due to the high exposure to financial and banking companies. The sell off has also given the fund more allure to investors searching for beaten down investments.
- Global X Canada Preferred ETF (NYSEArca: CNPF) yields 3.68%
- PowerShares Preferred Portfolio (NYSEArca: PGX) yields 6.52%
- Market Vectors Preferred Securities ex Financials ETF (NYSEArca: PFXF) yields 4.31%
Tisha Guerrero contributed to this article.