3 “Preferred” Dividends for Secure 6% Yields
December 08, 2016 at 05:00 AM EST
If you could earn 5% to 6% in income every year from a stock you don’t have to watch … you’d hold it today, right? Well, if you don’t already, here’s your wake-up call. Preferred stocks are a rarely talked about type of corporate equity that packs a one-two punch of high yield and low volatility. But that’s not why they’re called “preferred” – that moniker comes from the fact that preferred dividends take priority over common shares’ dividends, and must be paid out first. If a company wants to cut or suspend its payouts, it must do so to common shares before preferred shares. And better still, if the preferred stock is cumulative, a company that has suspended its dividends must pay out any unpaid dividends on preferreds before it can resume paying a dividend on its common stock. ... Read more