This brings to memory the conversation that I had with a now deceased friend. He had a managed account with one of the full-service brokers and had these type of investments in the portfolio. His comment was that the dividends were great but that the value of the stock kept dropping. If the story told to you by the Financial Advisor sounds too good to be true, it probably is. Quite often, high yields are achieved in part by what is in effect a return of principal, in other words part of the high yield is the return of your own money!Recently took a call from a Financial Advisor at JPM pitching their services. He suggested getting out of Short Term Treasuries and into Bank Preferreds yielding over 8% and taxed at qualified div rate. He didn't go into detail but are their really preferreds out their yielding that much? I assume if there are they are going to be called any day now?
Not saying Preferred Stocks are a bad investment, they are a stock/bond hybrid, I just think they are unnecessary for most investors. If you wanted to invest in this area of the securities market, I would use a diversified ETF for this purpose and not crank up my expectations sky high.
You are taking a fair amount of risk to get the 8% yield and this risk is concentrated in one industry. Sounds like the Advisor would be getting you into individual securities. I would be like Nancy Reagan and just say no.
Statistics: Posted by nedsaid — Sat Jul 20, 2024 3:38 pm