6 replies to this topic

[cp1]

Anyone invest in PFFD for income? Pros/cons??

 

Thanks

[Douglas]

cp1, I assume the PFFD you are referring to is the preferred stock ETF which shows a current yield around 5.18%.  In the little over 4 years that it has existed, it has only appreciated a few percent while a broad market index ETF like SPY which has a yield of 1.23% has appreciated something like 75%.  That's giving up a lot of appreciation for only a small increase in income.  It would be fairly straight forward to generate that 5.18% using a simple call writing strategy against a long SPY position or even a SPY put writing strategy against cash if you think (like I do) that it is currently overpriced.  I'm curious, why have you zeroed in on PFFD for income?  As a retired certified old fart suffering from FED interest rate suppression, I'm also constantly on the lookout for easy to milk income cows. 

 

 

Regards,

Douglas

[cp1]

Yes, I am referring to the preferred stock ETF. I am not retired yet but plan to within the next couple of years. I do have my eggs in various baskets. Trying to have a basket of dividend income assets. I already own ABBV, SDIV, IBM, KO, IP, T and GIS.  I automatically reinvest the dividends since I don't need the income today. 

 

I appreciate your feedback Douglas. I am also looking for any suggestions from the experts on this board.

[fib_1618]

I did a quick check on PFFD and found that 87% of the holdings are in utility issues, with 7% in healthcare and 6% industrial issues.

 

Don't know if that was what you were actually looking for based on the thread.

 

However, below is the NYSE Preferred stock advance/decline line through January 7th that might provide the insight you're looking for.

 

Fib

 

 

 

[cp1]

Thanks Fib...appreciate the info.

[cycletimer]

Try VRP instead. We are embarking on an ever rising interest scenario. Normal preferred will get killed over next 2-3 years. Variable and floating rate preferred on the other hand, will maintain their price levels close to PAR and their coupon rates will be reset upwards as interest rates rise.

[cp1]

Try VRP instead. 

 

Good one...thanks.