Monday, November 13, 2006

My "preferred" investment

With the stock market peaking, and the 10-year Bond paying a paltry 4.6%, I am finding the 6.2% to 6.8% yields of "hybrid preferred securities" quite attractive.

Hybrid preferred securities tend to behave like bonds (price fluctuation linked to credit quality and interest rate direction) but trade like stocks. Some even offer the dividend-like tax treatment of 15% (at least for now). Those can be held in regular accounts, while others are best used in tax-deferred accounts (e.g. IRA).

You may want to research the several industrial and financial companies that offer these vehicles (and the specifics of each); in the meantime, several examples can be found in this useful website

As brokers say, "This post shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State"


Anonymous said...

Is Quantum Online free? How do you buy them?

Alex B. said...

Quantum Online is a free web site, you will only need an e-mail address to register. You buy these hybrid securitites as you were buying a stock: they trade with a ticker (e.g. GEA, ISP), but note the call date, particularly is you are paying a premium