Reasons to Consider Preferred Stocks

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.”

S&P Rating	Description	Symbol	Div Rate	Next Payment	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 Communities 9%	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