Preferred shares are issued by corporations as a way to raise money, just like selling stock. Preferred shares however, have a preferred status because their dividend is always paid before the common stockholders can be paid a dividend. Additionally, preferred shares pay a much higher rate of income than common shares.
Therefore, preferred shares are suitable for retirees because they pay higher retirement income and offer greater safety than common stock. For example, the average common stock on the New York Stock Exchange pays a dividend of 2%. However, many preferred shares pay a fixed dividend of 6% and more. These are fixed rates that you enjoy for as long as you hold the preferred shares. Because investors hold these shares for income, they are traded less, are less volatile than common shares, and are designed for a more conservative income oriented investor. You can sell your preferred shares at any time, just like any share of stock. The sales price may be more or less than you paid. Alternatively, many investors hold their preferred shares indefinitely until “called” (redeemed) by the company. Almost all preferred shares have a provision allowing the company to call in their preferred shares at a set time at a set future date.
Any financial advisor can help you with preferred shares or mutual funds that invest in preferred shares.
This list is not kept current (it’s from 2000), but you can see some familiar names in the left column and some very attractive fixed rates in the “yield column.”
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Price |
Current Yield |
Yield to Call |
Call Date |
Call Price |
|
A+ |
ABN AMRO Cap Fund II 7.125% |
ABNprB |
0.4453 | 09/30/2001 | 24.78 | 7.19% | 7.48% | 03/31/2004 | 25 |
|
A+ |
Farmers Group 8.25% |
FIGprB |
0.5156 | 07/02/2001 | 25.6 | 8.06% | 8.02% | 12/31/2025 | 25 |
|
A |
Chase Preferred 8.10% |
CMBpr |
0.5062 | 09/30/2001 | 25 | 8.10% | 8.09% | 09/17/2001 | 25 |
|
A- |
Allstate Fin 7.100% QUIPs |
ALLprA |
0.4968 | 09/30/2001 | 25.16 | 7.90% | 6.40% | 11/24/2001 | 25 |
|
A- |
Duke Capital Fin II 7.375% QUIPs |
DUKprU |
0.4609 | 09/30/2001 | 25 | 7.37% | 7.37% | 09/30/2003 | 25 |
|
A- |
Travelers P&C 8.08% |
TAPprA |
0.505 | 09/30/2001 | 25.22 | 8.01% |
** |
any | 25 |
|
A |
American General 8.45% |
AGCprM |
0.54 | 07/02/2001 | 25.3 | 8.54% |
** |
any | 25 |
|
BBB+ |
Capital Re LLC 7.65% MIPs |
KREprL |
0.4781 | 08/01/2001 | 21.75 | 8.79% |
** |
any | 25 |
|
BBB+ |
Public Storage 8.875% |
PSAprG |
0.5546 | 09/07/2001 | 24.89 | 8.91% |
** |
any | 25 |
|
BBB |
Sierra Pacific Power 8.60% |
SRPprT |
0.5375 | 07/02/2001 | 24.48 | 8.78% | 28.54% | 07/29/2001 | 25 |
|
BBB |
Lincoln National 8.35% |
LNCprY |
0.5218 | 07/02/2001 | 25.51 | 8.18% |
** |
8/20/’2001 | 25 |
|
BBB |
Avalon
Bay |
AVBprF |
0.5625 | 08/01/2001 | 25.12 | 8.96% |
** |
any | 25 |
|
BBB |
First Industrial Realty 9.5% |
FRprA |
0.5937 | 09/30/2001 | 25.02 | 9.49% |
** |
any | 25 |
|
BBB |
AT&T Capital Corp 8.25% |
NCD |
0.5156 | 09/30/2001 | 25.5 | 8.09% | 7.33% | 11/15/2003 | 25 |
|
BBB |
Nexen 9.75% |
NXYpr |
0.6093 | 09/15/2001 | 25.46 | 9.57% | 8.87% | 10/30/2003 | 25 |
|
BBB |
NVP Capital I 8.20% |
NVPpr |
0.5125 | 09/30/2001 | 22.74 | 9.01% | 21.10% | 04/01/2002 | 25 |
|
BBB- |
Placer Dome 8.625% |
PDGprA |
0.539 | 09/28/2001 | 22.8 | 9.46% | 28.54% | 12/17/2001 | 25 |
|
BBB- |
Gables Residential Trust 8.3% |
GBPprA |
0.5187 | 08/29/2001 | 23.57 | 8.80% | 14.03% | 07/24/2002 | 25 |
|
BBB- |
BRE Properties 8.5% |
BREprA |
0.5312 | 09/30/2001 | 25.25 | 8.42% | 8.07% | 01/28/2004 | 25 |
|
BBB- |
Newscorp 8.625% |
NOPprA |
0.539 | 09/30/2001 | 24.37 | 8.85% |
** |
any | 25 |
| **purchase not recommended above $25 per share | |||||||||
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