Description
Preferred Securities are fixed income securities issued by private or public corporations that possess characteristics of both debt and preferred stock. Preferred Securities rank above preferred stock but below subordinated debt and will typically pay you a fixed coupon rate. In addition, most have a stated maturity date.
Perpetual Preferred Securities are issued without maturity dates but offer you fixed dividend payments. These securities typically have call protection for the first five years. Convertible Preferred Securities provide you with an option to convert the preferred shares into common shares. In exchange for this benefit, the yields offered on convertibles are generally less than those of Perpetual Preferred Securities. However, they do provide you with an opportunity to share in the price movement of the underlying common stock.
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Benefits
Enjoy a steady source of income.
This flexible investment is available in a variety of maturities so you can choose the time frame that works best for you.
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Features
Yields on most Preferred Securities are higher than on Corporate Bonds.
If circumstances change, Preferred Securities are actively traded in the secondary market. You are not locked in until the maturity date.
Preferred Securities are available in denominations as low as $25 per share, allowing for a low initial investment.
You typically receive quarterly interest payments.
Bond Market Association Brochures:
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Related Products/Services
Certificate of Deposit
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Municipal Securities
U.S. Treasury Securities
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Preferred Securities