PFF pays 5.52% annually on preferred stocks, but actively managed PFFA nearly doubles that yield to 9.85% via leverage and higher-coupon holdings.
PFFA's 2.11% expense ratio and leverage amplify both income and drawdown risk, making it better suited for cash-flow seekers than capital-preservation investors.
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Investors who bought the iShares Preferred & Income Securities ETF (NASDAQ:PFF) did so for one reason: steady monthly income from a diversified pool of preferred stocks, without picking individual issues. PFF is the largest preferred ETF on the market at $13.548 billion in ******* ets, charges 0.45%, and has paid a monthly distribution since 2007. The problem is the paycheck. At a 5.52% dividend yield, a $100,000 stake in PFF generates roughly $5,500 a year. For a reader who wants closer to $10,000 on the same balance, an actively managed cousin from Virtus deserves a look.
The preferred-stock fund tracks the ICE Exposure-Weighted U.S. Preferred Stock Index, which is dominated by bank and insurance preferreds. The top of the book reads like a who's who of U.S. financials: Boeing at 3.98%, plus large positions across Bank of America, JPMorgan, Morgan Stanley, and Goldman Sachs preferred series. The exposure is diversified, the beta is low at 0.53, and the price barely moves. That is the appeal and the ceiling.
#yield
PFFA's 2.11% expense ratio and leverage amplify both income and drawdown risk, making it better suited for cash-flow seekers than capital-preservation investors.
Don't wait: the ******* yst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now.
Investors who bought the iShares Preferred & Income Securities ETF (NASDAQ:PFF) did so for one reason: steady monthly income from a diversified pool of preferred stocks, without picking individual issues. PFF is the largest preferred ETF on the market at $13.548 billion in ******* ets, charges 0.45%, and has paid a monthly distribution since 2007. The problem is the paycheck. At a 5.52% dividend yield, a $100,000 stake in PFF generates roughly $5,500 a year. For a reader who wants closer to $10,000 on the same balance, an actively managed cousin from Virtus deserves a look.
The preferred-stock fund tracks the ICE Exposure-Weighted U.S. Preferred Stock Index, which is dominated by bank and insurance preferreds. The top of the book reads like a who's who of U.S. financials: Boeing at 3.98%, plus large positions across Bank of America, JPMorgan, Morgan Stanley, and Goldman Sachs preferred series. The exposure is diversified, the beta is low at 0.53, and the price barely moves. That is the appeal and the ceiling.
#yield
2 months ago
