In our quest for new investment opportunities, our club is looking at an
ETF (Ticker PFF). We're wondering if any of the other clubs have
experience with this investment? Specifically, are there any hassles come
tax time?
The dollar value of this stock is generally pretty steady at around $39 but
they pay a monthly dividend that averages around 6% annually. I'd
appreciate your comments if you've invested in this preferred stock.
Thanks,
Dick Lewis
GMIC
Jeanne Tieken on
We have experimented with two ETFs (SOCL, social media; water resources) and did not run into any accounting or tax problems. We decided we liked individual stocks better; we watched the top 10 holdings in the ETFs and then decided if and which ones we'd like to own.
In our quest for new investment opportunities, our club is looking at an
ETF (Ticker PFF). We're wondering if any of the other clubs have
experience with this investment? Specifically, are there any hassles come
tax time?
The dollar value of this stock is generally pretty steady at around $39 but
they pay a monthly dividend that averages around 6% annually. I'd
appreciate your comments if you've invested in this preferred stock.
We have experimented with two ETFs (SOCL, social media; water
resources) and did not run into any accounting or tax problems. We decided we
liked individual stocks better; we watched the top 10 holdings in the ETFs and
then decided if and which ones we'd like to own.
In our quest for new investment opportunities, our club is looking at an
ETF (Ticker PFF). We're wondering if any of the other clubs have
experience with this investment? Specifically, are there any hassles
come tax time?
The dollar value of this stock is generally pretty steady at around $39
but they pay a monthly dividend that averages around 6% annually. I'd
appreciate your comments if you've invested in this preferred stock.
Thanks,
Dick Lewis
GMIC
Laurie Frederiksen on
Hi Dick,
Don't forget that you need to focus on the change in the value of your shares as well as the yield for this type of investment. Looking at yields alone can be misleading.
Preferred stock has many characteristics of a bond. In a rising interest rate environment, shares of preferred stock (or this ETF), will fall in value. This would reduce your effective yield.
So it probably isn't something that will bring you quite the net fixed income that you are anticipating.
Here's a good writeup on the effect of interest rate changes on bond prices. It would apply also to Preferred stock.
We have experimented with two ETFs (SOCL, social media; water
resources) and did not run into any accounting or tax problems. We decided we
liked individual stocks better; we watched the top 10 holdings in the ETFs and
then decided if and which ones we'd like to own.
In our quest for new investment opportunities, our club is looking at an
ETF (Ticker PFF). We're wondering if any of the other clubs have
experience with this investment? Specifically, are there any hassles
come tax time?
The dollar value of this stock is generally pretty steady at around $39
but they pay a monthly dividend that averages around 6% annually. I'd
appreciate your comments if you've invested in this preferred stock.
Thanks,
Dick Lewis
GMIC
Dick Lewis on
Thanks Laurie. Your comments are helpful. I agree that the
history of this stock may be misleading in terms of what the future may
hold. We've looked at what has been a pretty consistent 6% dividend for a
number of years.... but that has also been during periods of unusually low
interest rates. Your point about this being similar to a bond is something
we had not considered. With interest rates trending upward, we need to
factor this into our decision process.
Don't
forget that you need to focus on the change in the value of your
shares as well as the yield for this type of investment.
Looking at yields alone can be misleading.
Preferred
stock has many characteristics of a bond. In a rising interest
rate environment, shares of preferred stock (or this ETF), will fall
in value. This would reduce your effective yield.
So
it probably isn't something that will bring you quite the net fixed
income that you are anticipating.
Here's
a good writeup on the effect of interest rate changes on bond
prices. It would apply also to Preferred stock.
In our quest for new investment opportunities, our club is looking at
an ETF (Ticker PFF). We're wondering if any of the other clubs have
experience with this investment? Specifically, are there any hassles
come tax time?
The dollar value of this stock is generally pretty steady at around $39
but they pay a monthly dividend that averages around 6% annually. I'd
appreciate your comments if you've invested in this preferred stock.