Preferred Stocks Yielding More Than 8%

There’s nothing wrong with owning something like iShares US Preferred Stock (PFF) which offers a dividend yield of 6.6%. It’s a little dicey in that it isn’t terribly diversified, with 65% of its holdings coming from the financial sector. But then again, most preferred offerings come from financials anyway. The problem with a non-diversified ETF like this is that if the financial sector comes under pressure, the whole ETF may get taken down.

With individual issues, they may or may not get taken down, even if in the same sector. If the individual name has strong underlying fundamentals, it may get spared. On the other hand, if it doesn’t — if it gets caught up in the tsunami — you may find yourself with a generational buying opportunity. If your preferred stock’s underlying company is solid and is being shot down because it happens to be in the same sector, there’s an excuse to just buy more. Let’s move on to today’s preferred picks: New York Mortgage Trust (NYMT), Montpelier RE Holdings (MRH) and Stag Industrial (STAG).

Source: InvestorPlace

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