Preferred stocks offer a unique investment opportunity, sitting comfortably between common stocks and bonds. They provide investors with regular dividend payments, often at higher yields than common stocks, along with the potential for capital appreciation. To tap into this income-focused asset class, many investors turn to preferred stock exchange-traded funds (ETFs). In this article, we will explore five of the best preferred stock ETFs, known for delivering high and stable dividends.
- iShares Preferred and Income Securities ETF (PFF)
The iShares Preferred and Income Securities ETF stands out as one of the most established and widely recognized preferred stock ETFs. It offers broad exposure to U.S.-based preferred stocks, tracking the S&P U.S. Preferred Stock Index. This ETF provides investors with a diversified portfolio of preferred stocks spanning various industries. PFF is known for its high liquidity and competitive expense ratio, making it a top choice for income-focused investors.
- Invesco Preferred ETF (PGX)
The Invesco Preferred ETF seeks to mirror the performance of the ICE BofAML Core Plus Fixed Rate Preferred Securities Index. It emphasizes higher-quality preferred stocks with fixed-rate coupons, adding a layer of stability to the portfolio. PGX’s focus on quality and yield makes it a compelling option for investors in search of high and stable income.
- VanEck Vectors Preferred Securities ex Financials ETF (PFXF)
For those looking to invest in preferred stocks with minimal exposure to financial institutions, the VanEck Vectors Preferred Securities ex Financials ETF is an attractive choice. PFXF tracks the Wells Fargo Hybrid and Preferred Securities ex Financials Index, which concentrates on non-financial sector preferred stocks. This ETF offers diversification and stability in a distinct segment of the preferred stock market.
- Global X SuperIncome Preferred ETF (SPFF)
The Global X SuperIncome Preferred ETF takes an international approach to preferred stocks. SPFF follows the S&P Enhanced Yield North American Preferred Stock Index, including preferred stocks from both the U.S. and Canadian markets. This ETF’s global exposure can enhance diversification while maintaining a focus on high and stable dividends.
- Invesco Financial Preferred ETF (PGF)
The Invesco Financial Preferred ETF hones in on preferred stocks issued by financial institutions. It tracks the ICE Exchange-Listed Fixed & Adjustable Rate Non-Cumulative Preferred Securities Index, offering investors access to a specific subset of the preferred stock market. PGF’s targeted focus on preferred stocks from the financial sector provides investors with specialized income opportunities.
Preferred stock ETFs are an excellent choice for income-focused investors who desire regular dividend income and the potential for capital appreciation. These five ETFs offer different strategies for preferred stock investing, including diversified exposure, an emphasis on quality, non-financial sector focus, global reach, and specific focus on financial institutions. When considering preferred stock ETFs, it’s important to align your choices with your financial goals, risk tolerance, and investment horizon. Preferred stock ETFs can be a valuable addition to an income-focused investment strategy, providing access to high and stable dividends.
