My Preference For Preferreds

Preferred stocks may sound like humdrum investments, but the category’s performance has been anything but, with year-to-date total returns of about 7.5%.

- Jeffrey R. Kosnett

In March, 15 new offerings totaling nearly $3 billion appeared, four times the usual monthly quota. That’s good news for anyone looking for fully liquid investments that pay a significant yield premium over Treasuries, bank deposits and most dividend-paying common stocks. Preferred shares pay a fixed dividend that takes priority over common-stock payouts. Common stockholders can’t get a cent unless preferred investors are paid as promised, though bondholders get paid first.