Are Preferred Stocks even worth it?

[Rocko]

One option I like if you're in to chasing yields are MLPs (master limited Partnerships). They're different from preferred stock in that they distribute capital profits, where as preferred stock generates interest, so they're taxed differently. I like MLPs for the income and capital appreciation. If you believe in fracking, there the way to go.

You can buy into MLP's via ETF's and get traditional 1099 tax treatment. AMLP, for example. Good yield right now, over 6%.

But yeah, dividend stocks became overvalued when traditional bond yields went into the shitter.

Lord Abbott just put two fascinating studies that show which bond classes react best historically during times of increasing interest rates: Short term corporates, high yield (!), floating rate and convertibles. And, obviously, shorting treasuries with TBT.

.

Didn't know that. Ill look in to AMLP. Does it move?

Had a quick look. Pretty good yield, doesn't move, certainly liquid enough. Thanks for the tip. I tend to stay away from ETFs though.

 

[emilynghiem]

I like the concept of these kinds of stocks. You buy them, and sit on them while they generate dividends every quarterly or monthly period.

However, one thing that's been popping up lately is that these stocks shouldn't be used because of rising interest rates.

Should investors consider preferreds? Is an APY around 6.5%-8% good?

-Edited out Mentions List in spoiler tag-

Hi Wake:
I am more interested in how to use these systems
to reward citizens for investing in local business and community development,
and in creating government reforms themselves. this could be done through tax reforms,
or through issuing credits to taxpayers for public funds abused for fraud or waste,
and investing in building local economy, such as revamping hospitals, schools, etc. into sustainable campuses for democratically managed local governance.

Instead of the US govt owing debts to foreign countries, why not reward American citizens and businesses for buying out the debts, lending money to pay back for past damages from fraud abuse or other criminal violations, and maybe earning interest to give incentive. Or holding property as collateral until the debts are collected back over time from the wrongdoers responsible for the costs plus interest. So where corporate abusers of govt and public money destroyed environmental or historic sites (ex: Headwaters Forest in CA or Freedmen's Town in TX) then citizens can claim ownership of shares in these national landmarks by lending against the debts and damages until restitution is fully recovered.

For rate of interest on returns, using financing to invest in real estate as rental income, the mentors through successful networks that focus on single family and multi family property (ex: Lifestyles Unlimited - The education and mentor group for real estate investors) shoot for MUCH higher returns that you can get from stocks, while amassing equity from investments (in addition to the passive income from monthly rentals exceeding the monthly payments) in order to leverage financing for more property.

An extreme example was when the founder bought his current house as an investment, paying cash for it undervalue, then refinancing at 500,000 more so he pocketed this difference (as a DEBT, between two loans) tax-free since it isn't counted as income.
If the house was bought for 3 or 3.5M and he refinanced it for 3.5 or 4M, to gain 500K tax free in 6 months (and he owns the property until he chooses to sell it, with the benefit of equity used to leverage further financing for more investments), what is the return on that?

That investment is his pride and joy. Most of the other purchases are not like that, but the experienced investors will follow the same formula, calculate the difference in rental value over the total monthly payments of all costs and expenses combined, and only buy properties that meet a high enough return level, higher than you would get from stocks, or 401K or these other methods, or else they don't buy that property. You can't predict stock values, like you can compare rental rates in a zip code, and calculate the range of price and value that a property has to meet in order to get the return you want.

If I was going to invest, I would go for property. I believe all people should have equal access to education and training in the area of business, financial and property management, or else the disparity in socioeconomics causes worse problems.

 

[SteveParker123]

The best thing about preferred stocks is that it possesses the features of both shares and bonds. The benefit of this feature is that it makes the valuation of shares rather different from a common share. You can be the owner of the preferred stock similar to other common stocks. Additionally, preferred stock has kind of fix payment, which makes it very much similar to bond.

 

[Toro]

One option I like if you're in to chasing yields are MLPs (master limited Partnerships). They're different from preferred stock in that they distribute capital profits, where as preferred stock generates interest, so they're taxed differently. I like MLPs for the income and capital appreciation. If you believe in fracking, there the way to go.

You can buy into MLP's via ETF's and get traditional 1099 tax treatment. AMLP, for example. Good yield right now, over 6%.

But yeah, dividend stocks became overvalued when traditional bond yields went into the shitter.

Lord Abbott just put two fascinating studies that show which bond classes react best historically during times of increasing interest rates: Short term corporates, high yield (!), floating rate and convertibles. And, obviously, shorting treasuries with TBT.

.

I'd avoid most MLPs.

There is a fetish for yield right now, and most yield products are overpriced.

 

[SteveParker123]

Hi Everyone,

I believe that buying U.S Preferred Stock is a great deal for local and foreign investors but the US stock market face challenges soon after terrorist attack on World Trade Center in September 11, 2001. We all know that the US stock market face recession and airline organizations of the country are most affected ones. However, President George H.W. Bush at that time sign the $18.6 billion bailout plan for the reform of airlines industry.
So, history confirms that the U.S government plays a prominent role in reforms for its local industries and always support them in recession period. Nowadays,the U.S stock market is touching the sky and every stock product is considered as an asset because of its strong economy indicators. I hope,now, you had better understand why every investor wants to invest in the U.S stock
market.

Thanks,

Steve Parker.

 

[Wake]

I'm such a dumbass, lol. My original financial strategy was to invest in an FDIC-insured money market account at a bank. At least twice bank attendants there confirmed that'd I'd be paid $17.50 on $2500 each month in interest. Yesterday I was in the area and the gut said it'd be a real good idea to check just one more time before committing to an account that penalizes you for withdrawing the total sum. Asked a new attendant, who checked with the manager, who clarified that the $17.50'd be earned per the year. That's it. Can't live on $17.50 a year. If it were $17.50 each month, that'd be nice, but no... *Imitates Archie Bunker's "PFFTBB!!" sound."

So, hopes of prospering that way went up in smoke, so now I pretty much have to invest in whatever the stock market has to offer. The higher the yield is the more risk, but if you buy a lot of those high-yield preferreds from all different kinds of sectors you'd protect yourself. Also, ALWAYS check the dividend history. If the stock started at 8% interest yield, but then shot up to 9.5%, that's probably a sign the company is in trouble.

This morning I've been doing my rounds on this list: Highest Yielding Preferred Stocks - Slide 1 of 50. Then you go click on the "Dividend History" tab, so you can check its chart on how its common and preferred stocks have done over the years. ALWAYS check the dividend history. If it was giving $0.24 per month, but then dipped down to $0.18, what does that mean? Is that a good thing? I'm a guy of sub-average intellect so I've gotta analyze this stuff really hard just to ensure due diligence. If a company, say, has had a SOLID (non-changing) dividend for 5+ years, to me that sounds like a good thing. If you really want to sleep well at night invest in Dividend Aristocrats, which are preferreds that have paid solid dividends for the last 25 years, AND whose dividends have increased in amount.

Strategy is key when it comes to investing, and so's patience. You can't get emotional or faithful about it. Study the numbers religiously, question stuff, and keep in mind that successful investors understand and anticipate human behavior. Those who perceived the value of Viagra before it massively skyrocketed in value, well, they suspected humans would like the boost in sexual performance. Also keep in my futuristic technology and advancements in research... consider what's both futuristic and practical. Also, whenever you're at large malls, take a stroll around and look at the shops that are always busy and packed full of customers. If you're looking for stability over high yield, they might be good options, too.

Personally, I'm not sure whether to invest in multiple Real Estate sectors or not. That list mentioned earlier is chock-full of real estate companies. Then again there was that housing bubble burst thingy in 2008, I think...? Real estate looks promising, ESPECIALLY "Reality Income" (O), but the gut tells me this bubble could burst. Oh, and before I forget volatility is another important factor to consider. If memory serves the less volatile the stock is, the less likely it'll come crashing down from bankruptcy (I think?). Then again, less risk, less reward. If you're interested in trading stocks, consider taking advantage of volatility while using limit orders to ward against slippage, which is when you try to buy/sell a stock, but you get stiffed a bit (you buy 100 $20 stocks, and at the last moment each one shoots up to $25. Congrats, you're screwed. ). Also, if you use an online brokerage like Scottrade you can put all of the companies that interest you on a watchlist that updates around every 30 minutes when the market's open.

*DISCLAIMER: This is from a newbie investor. Please don't take my words as solid investment advice.

 

[Mac1958]

Hi Everyone,

I believe that buying U.S Preferred Stock is a great deal for local and foreign investors but the US stock market face challenges soon after terrorist attack on World Trade Center in September 11, 2001. We all know that the US stock market face recession and airline organizations of the country are most affected ones. However, President George H.W. Bush at that time sign the $18.6 billion bailout plan for the reform of airlines industry.
So, history confirms that the U.S government plays a prominent role in reforms for its local industries and always support them in recession period. Nowadays,the U.S stock market is touching the sky and every stock product is considered as an asset because of its strong economy indicators. I hope,now, you had better understand why every investor wants to invest in the U.S stock
market.

Thanks,

Steve Parker.

dafuq?

.

 

[Zander]

I'm such a dumbass, lol. My original financial strategy was to invest in an FDIC-insured money market account at a bank. At least twice bank attendants there confirmed that'd I'd be paid $17.50 on $2500 each month in interest. Yesterday I was in the area and the gut said it'd be a real good idea to check just one more time before committing to an account that penalizes you for withdrawing the total sum. Asked a new attendant, who checked with the manager, who clarified that the $17.50'd be earned per the year. That's it. Can't live on $17.50 a year. If it were $17.50 each month, that'd be nice, but no... *Imitates Archie Bunker's "PFFTBB!!" sound."

So, hopes of prospering that way went up in smoke, so now I pretty much have to invest in whatever the stock market has to offer. The higher the yield is the more risk, but if you buy a lot of those high-yield preferreds from all different kinds of sectors you'd protect yourself. Also, ALWAYS check the dividend history. If the stock started at 8% interest yield, but then shot up to 9.5%, that's probably a sign the company is in trouble.

This morning I've been doing my rounds on this list: Highest Yielding Preferred Stocks - Slide 1 of 50. Then you go click on the "Dividend History" tab, so you can check its chart on how its common and preferred stocks have done over the years. ALWAYS check the dividend history. If it was giving $0.24 per month, but then dipped down to $0.18, what does that mean? Is that a good thing? I'm a guy of sub-average intellect so I've gotta analyze this stuff really hard just to ensure due diligence. If a company, say, has had a SOLID (non-changing) dividend for 5+ years, to me that sounds like a good thing. If you really want to sleep well at night invest in Dividend Aristocrats, which are preferreds that have paid solid dividends for the last 25 years, AND whose dividends have increased in amount.

Strategy is key when it comes to investing, and so's patience. You can't get emotional or faithful about it. Study the numbers religiously, question stuff, and keep in mind that successful investors understand and anticipate human behavior. Those who perceived the value of Viagra before it massively skyrocketed in value, well, they suspected humans would like the boost in sexual performance. Also keep in my futuristic technology and advancements in research... consider what's both futuristic and practical. Also, whenever you're at large malls, take a stroll around and look at the shops that are always busy and packed full of customers. If you're looking for stability over high yield, they might be good options, too.

Personally, I'm not sure whether to invest in multiple Real Estate sectors or not. That list mentioned earlier is chock-full of real estate companies. Then again there was that housing bubble burst thingy in 2008, I think...? Real estate looks promising, ESPECIALLY "Reality Income" (O), but the gut tells me this bubble could burst. Oh, and before I forget volatility is another important factor to consider. If memory serves the less volatile the stock is, the less likely it'll come crashing down from bankruptcy (I think?). Then again, less risk, less reward. If you're interested in trading stocks, consider taking advantage of volatility while using limit orders to ward against slippage, which is when you try to buy/sell a stock, but you get stiffed a bit (you buy 100 $20 stocks, and at the last moment each one shoots up to $25. Congrats, you're screwed. ). Also, if you use an online brokerage like Scottrade you can put all of the companies that interest you on a watchlist that updates around every 30 minutes when the market's open.

*DISCLAIMER: This is from a newbie investor. Please don't take my words as solid investment advice.

It's your life and your money. Do whatever you like. But personally, I think you need to educate yourself on passive investment strategies. Spend your time increasing your marketable skills and leave your investments alone, to grow. Over the long haul you'll be much better off than trying to "time the market" or "trade".

You can start here for some great information......Getting started - Bogleheads

Develop a workable plan
Invest early and often
Never bear too much or too little risk
Never try to time the market
Use index funds when possible
Keep costs low
Diversify
Minimize taxes
Keep it simple
Stay the course

Good luck!

 

[sjay]

I wouldn't invest in stocks, annuities of any kind, Wake. I'd pay the penalties for anything holding my money and cash out right now.

Jeremiah,I know you got expert advice from your friend in Europe last year to sell everything.I'll repeat what I asked then,if you guys are such experts why don't you short the market.You didn't respond then, are you going to respond this time or are you going to run and hide with your tail between your legs again?

 

[rennai]

The purpose of a stock market is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing. Just imagine how difficult it would be to sell shares if you had to call around the neighborhood trying to find a buyer. Really, a stock market is nothing more than a super-sophisticated farmers' market linking buyers and sellers.
Before we go on, we should distinguish between the primary market and the secondary market. The primary market is where securities are created (by means of an IPO) while, in the secondary market, investors trade previously-issued securities without the involvement of the issuing-companies. The secondary market is what people are referring to when they talk about the stock market. It is important to understand that the trading of a company's stock does not directly involve that company.

 

[srlip]

Read William Oneil's HOW TO MAKE MONEY IN STOCKS, and his newspaper, THE INVESTOR'S BUSINESS DAILY. But my personal recommendation is that you get to know a vet really well, a decent one, use his school loans and home loan to get a big old house in the right area, and rent out small rooms for $100 per week. Like at LEAST 20 rooms. Do the math. Check it out, it's already being done on a large basis, in many cities, it's a HUGE money maker, done my way. Both you and he can get 14k in loans/grants, in 5 months (start school in August) in return for attending classes for 3 weeks each of the 2 semesters, at a local junior college. You need not pass, or do any work, but you've gotta be there and turn in a few assignments. 28k, man.

And there's a way to use 5k (each of you) of that to get you a 3rd worlder spouse (each) who will pay you 25k (each) per year, for 6 years, too. Of course you and the vet have to live in the house (you can move out after a year or so) and the vet gets paid to stay there and manage the place. He's gotta have a job in order to get the VA home loan, so that's part of the money you gotta have. He's your teacher/ ghost- writer/consultant, don't you know? His spouse's income (and loans and grants) become YOUR money. Dont bring one here who can't get a MINIMUM of $20 an hour job, almost immediately, and they'd better be able to make $30 an hour after they get their US bachelors, cause they will be giving you 15k per year (cash) If you pick them carefully (engineers, MD's, Physicists, etc) they can have a bachelor's from here in 2 years of half time schooling, and then go to graduate school part time, too. If they then work for the right agency for a few years, their school-loans are "forgiven". This is a VERY easy "sell" to an unemployed vet and to 3rd worlders, folks. eff the stockmarket, etc.

With inflation averaging 5% per year for the past 40 years, and homeloan interest at 4%, you'd be a fool to pay off the loan on the house. Instead, save up that money and get ANOTHER such house, and then 2 more, and then 4 more, etc. There's LOTS of unemployed vets and 4rd worlders with bachelar's degrees (who will do almost anything to come to US)/. YOu need either 20k in hand for each house that you want to buy (for repairs and making payments while you get tenants) or 10k and REAL, secure income. Tenants can work off a lot of their rent, doing painting, carpet removal, tile installation, roofing, etc, under your watchful eye, of course.