ETFs that contain preferred shares have the potential to be a distinctive source of dependable income. Income-seeking investors have another option besides the typical dividend stocks, high-yield bonds, and real estate investment trusts: preferred stocks, which are hybrid securities that combine characteristics of ordinary stocks and bonds.
VanEck Vice President and Director of Product Management Brandon RakszawskiIn a company’s capital structure, preferred stock investors typically rank behind senior debt holders and ahead of shareholders of common stock. The hybrid profile of preferred stocks gives them some distinctive characteristics.
Investors evaluating potential holdings often explore a range of options, including exchange-traded funds (ETFs) like NYSE Jepi. Monitoring factors such as Jepi price and Jepi stock dividend is essential for making informed investment decisions. Similarly, the JPST ETF, known for its stability and JPST dividend, can be an appealing addition to a diversified portfolio. For those seeking exposure to broader market trends, SPTM stock provides a glimpse into the performance of the S&P Total Market Index, while SKYY stock and SKYY ETF cater to those interested in cloud computing companies.
Additionally, XLY stock, focusing on the consumer discretionary sector, can offer insights into consumer behavior and economic trends. Exploring ETFs like Mid Cap Value ETF, PFFD ETF, and Mid Cap Growth ETF can provide diversification across market segments. Staying attuned to the NYSEARCA Jepi and Jepi ETF price is vital in navigating the dynamic landscape of investment opportunities.
In contrast to common shares, these assets typically lack voting rights, but they make up for it in other ways. Notably, preferred equities frequently produce steady income with substantially greater yields than conventional dividend stocks and even corporate bonds.
|PREFERRED STOCK ETF||EXPENSE RATIO|
|iShares Preferred and Income Securities ETF||0.45%|
|VanEck Preferred Securities ex Financials ETF||0.42%|
|First Trust Preferred Securities and Income ETF||0.83%|
|Invesco Preferred ETF||0.4%|
|SPDR ICE Preferred Securities ETF||0.42%|
|Global X U.S. Preferred ETF||0.21%|
|Global X SuperIncome Preferred ETF||0.43%|
Top 7 Preferred Best Stock ETFs Today
7.Global X SuperIncome Preferred ETF (SPFF)
Preferred stocks have the advantage of receiving a dividend, which is typically set but can occasionally be floating. In either case, this contributes to making sure owners get consistent, continuous cash payments. Additionally, preferred equities often have a weaker correlation with common stocks and fixed income, which makes them effective portfolio diversifiers.
For investors looking for yield, Global X provides SPFF, which tracks the Global X U.S. High Yield Preferred Index and maintains a concentrated portfolio of the 50 preferred companies with the highest yields in the United States. Currently paying a 30-day SEC yield of 6.5%, the ETF has distributed money on a monthly basis for the past 11 years. SPFF levies an expense ratio of 0.48%.
6.Global X U.S. Preferred ETF (PFFD)
With a preferred stock ETF, you can hire an asset manager to do the research and selection of specific preferred shares for a relatively minimal fee. You can concentrate your study on choosing the best asset manager and making sure that their investment philosophies, strategies, and holdings align with your own. PFFD, which charges 0.23%, is a fantastic option with an expense ratio that is below average.
In order to replicate the ICE BofA Diversified Core U.S. Preferred Securities Index, PFFD is passively managed. The ETF currently owns 238 preferred issues from American corporations, all of which have a financial industry concentration. In terms of income, PFFD has paid monthly payments for six years in a row and now pays a 30-day SEC yield of 6.7%. AUM for the ETF is just over $2.2 billion at the moment.
5.SPDR ICE Preferred Securities ETF (PSK)
The preferred stock ETF PSK, which follows the ICE Exchange-Listed Fixed & Adjustable Rate Preferred Securities Index, can be used by investors seeking a preferred stock ETF with more stringent requirements. For a preferred stock to be eligible for inclusion, it must be non-convertible, issued in U.S. dollars, have a par value of $25, be traded on the NYSE or Nasdaq, and have an investment grade rating from one of Moody’s or Standard & Poor’s.
Other requirements include having a maturity date that is at least 18 months away and a trading volume of at least 250,000 units in the six months prior. Similar to the majority of the ETFs on this list, the financial sector preferred securities account for a significant portion of PSK’s allocation (71.8%), with utilities coming in second at 13.2%.
4.Invesco Preferred ETF (PGX)
PGX is a reliable preferred stock ETF that meets all the criteria; it is neither the largest nor the most profitable nor the most volatile nor the priciest. However, it is astonishingly bland in every category that matters, which is exactly what you want from an ETF like this. The ICE BofAML Core Plus Fixed Rate Preferred Securities Index is tracked by PGX.
There are several subtleties to be aware of, though. PGX approximates the index’s preferred stock holdings with its current holdings of 265 rather than holding all of the preferred equities it tracks. PGX also provides an options chain for investors seeking greater exposure.
3.First Trust Preferred Securities and Income ETF (FPE)
FPE can be a decent substitute for PFXF or PFF for investors looking for an actively managed option. FPE does not track an index, in contrast to the two ETFs before it. In addition to preferred stocks, the ETF is free to target high-yield corporate bonds and convertible instruments if its management team sees suitable. With a higher cost ratio of 0.85%, FPE is more expensive than the majority of actively managed ETFs.
With 40.6% of its issuers being banks, 19.9% being insurance companies, 7.3% being capital markets companies, and 4.4% being financial services companies, FPE has substantial allocations to preferred stocks from businesses in the financial sector. The majority of the ETF’s holdings are below investment grade, with only around 10% of them being rated BBB+ or higher.
2.VanEck Preferred Securities ex Financials ETF (PFXF)
Investors just learned a crucial lesson about sector concentration from the recent failure of Silicon Valley Bank. PFXF provides a viable option for people who are wary about PFF due to its large concentration of preferred stock from companies in the banking sector. The ICE Exchange-Listed Fixed & Adjustable-Rate Non-Financial Preferred Securities Index, which solely includes securities from non-financial corporations, is what this ETF tracks.
The PFXF offers investors to acquire preferred stocks in utilities and real estate since many investors already have exposure to financials through their equity and fixed-income allocations. Additionally, traditionally, non-financial preferred securities have had a modest yield premium, a shorter maturity, and a reduced call risk. PFXF has a 30-day SEC yield of 7.6% and an expense ratio of 0.41%.
1.iShares Preferred and Income Securities ETF (PFF)
According to Core Planning’s financial counsellor, bonds and stocks both carry credit and interest rate risk. Stocks also carry market risk. Preferred stocks combine the two by taking a little amount from each, which can be a method to lower the risks related to each asset class, add more yield, and open up options for diversification. Investors might purchase PFF for a broad bet on this asset class.
PFF presently owns 454 preferred stock issues, with 71.4% coming from businesses in the financial industry. The ICE Exchange-Listed Preferred & Hybrid Securities Index is tracked by the ETF, which is passively managed and has an expense ratio of 0.46%. PFF now pays a 6.7% 30-day SEC yield. The ETF is one of the more well-liked alternatives for preferred shares, with an approximate $12.7 billion in assets under management, or AUM.