iShares U.S. Preferred Stock ETF (NYSEArca: PFF)
12-month yield: 6.85%
Comment: PFF is the largest preferred stock ETF on the market with $10.4 billion in assets. Preferreds fall somewhere between bonds and stocks. Preferred share dividends take precedent over common share dividends but fall below bonds in a company’s debt obligation hierarchy. However, they do not benefit from earnings growth of the issuing company, and they will be pressured by a rising rate environment. Other preferred stock ETFs also include attractive yields – the PowerShares Preferred Portfolio (NYSEArca: PGX) has a 6.11% 12-month yield and Global X SuperIncome Preferred ETF (NYSEArca: SPFF) has a 7.13% 12-month yield.
