Preferred Stock ETF 101 | ETF Trends

Preferred stock carrying exchange traded funds (ETFs) may attract investors’ attention, especially as the bond markets cool off. Preferred stocks usually have a fixed dividend and carry no voting rights, among other things.

Even though preferred stocks are listed as equity on the balance sheet, they should be viewed more like bonds than common stocks, says Todd Lebor for The Motley Fool.  Preferred stock have priority over common stocks in the case of bankruptcy and with regard to dividends, but they usually don’t reap the benefits of a company’s success. [ETFs That Yield More Than Your Savings Account.]

According to Wikipedia, the preferred stock is a special equity security that has properties of both an equity and a debt instrument and is generally considered a hybrid instrument. Dividend income streams are common with preferred stock as well, and the companies are prone to credit ratings. The rating for preferreds is generally lower since preferred dividends do not carry the same guarantees as interest payments from bonds and they are junior to all creditors. [Are Preferred Share ETFs Right For You?]

You can find all of the preferred stock ETFs in our ETF Analyzer; once there, sort by yield, top holdings, performance and more. These ETFs are all above their 200-day moving average. Sign up for alerts to be notified of trading opportunities as soon as they happen.

  • SPDR Wells Fargo Preferred Stock (NYSEArca: PSK): The heaviest weighting is in financials at 31.3%; yields 3.1%.
  • iShares S&P US Preferred Stock Fund (NYSEArca: PFF): Financials 89.2%; consumer discretionary 4.5%; yields 9.3%.
  • PowerShares Preferred Financial (NYSEArca: PGF): The stocks in this fund are all focused on the financial sector; yields 6.9%.
  • PowerShares Preferred Portfolio (NYSEArca: PGX): The majority of this fund is financials, with 87.8% of the weighting. Utilities and communications make up small portions. Yields 6.6%.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.