Q: What are the pros and cons of preferred stock? I am retired.
A: Thanks for your question…Preferred stocks are a great way to add income to your portfolio. Most preferred stocks are long dated debt issued by companies paying rates anywhere from 5.5%-10%. The price of these will trade in line with longer dated bonds. Right now for example, we are in a low interest rate environment and most of the preferred that pay over 6.5% are trading at premiums. If you are looking at investing in preferred stocks you may want to consider buying into an ETF like PGF, PFF or PGX.