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Wells Fargo recently issued a cautious forecast of global GDP growth at 3% in 2012, which would be the slowest annual rate of growth since 2009. Also, Invictus Consulting Group states that over 750 banks are at risk of failing in the U.S. over the next two years. Moreover, Dr. John Hussman points out that in the past 10 recessions, payroll employment growth was positive in eight of those 10 recessions in the month that the recession began.

It is too soon to dismiss talks of a recession. After all, a chunk of Q4 GDP growth was attributable to growth in inventories, which signals a likely slowdown in Q1 GDP growth in 2012. Any flashpoint may send the U.S. economy reeling. Do this, protect your money, and seek out conservative returns.

Now may be time to consider adding more fixed income stocks to your portfolio. I like preferred stocks because you can smooth out the bumps and erratic moves of the market through consistent dividend payments. Also, these stocks do not fluctuate like common shares and equities. Companies aim to make dividend payments to avoid credit rating downgrades. With dividend paying consumer stocks running up and reaching overvalued levels, preferred stocks offer reasonable alternatives.

Below, I focus on preferred stocks from utilities because of stable cash flows from customers. I take care to mention those at or below par value or call price, which is the dollar amount that you get after the security reaches maturity. Generally speaking, you should avoid preferred stocks that trade significantly above par value, because you end up losing the gap between what you paid for and the par value or call price. With the Fed targeting 0%-0.25% for the federal funds rate and slowing global economic growth, you ought to consider the following.

Niagara Mohawk Power (NYSE:NGG) (3.60% Series Cumulative)

Recent Price

$91.00 per share

Callable?

Anytime at $104.85 per share

12.9% capital appreciation opportunity

Preferred Stock IPO

Jan 1950

Dividends

$0.90 per quarter

All payments made since Q1 2002

Next dividend payment should be on March 30

Record date is in first week of March

Current yield

3.9%

S&P Rating

BBB

52 week trading range

$80.65 - 93.00

2008 lows

Low $80's

Ticker symbol (Yahoo! / Google / Fidelity)

NMK-PB / NMK-B / NMK/PB

These shares fared well during the financial turmoil in 2008 and 2009 by hovering in the low $80s.

I recommend this for income investors who aim to have in between a low to medium risk profile.

Niagara Mohawk Power provides electricity service to approximately 1.6 M customers and natural gas service to approximately 565 K customers in upstate New York. It is a subsidiary of National Grid USA, which is an indirect subsidiary of National Grid plc. National Grid USA delivers electricity to approximately 3.4 M customers in Massachusetts, New Hampshire, New York and Rhode Island, and manages the electricity network on Long Island under an agreement with the Long Island Power Authority (LIPA). It is the largest distributor of natural gas in the northeastern U.S., serving ~3.5 M customers in Massachusetts, New Hampshire, New York and Rhode Island. National Grid USA also owns over 4,000 MW of contracted electricity generation that provides power to over 1 M LIPA customers.

Consolidated Edison (NYSE:ED) ($5 Cumulative)

Recent Price

$103.31 per share

Callable?

Anytime at $105.00 per share

Preferred Stock IPO

Jan 1936

Dividends

$1.25 per quarter

All payments made since Q2 2002

Next dividend payment should be on May 1

Record date is in the second week of April

Current yield

4.8%

S&P Rating

BBB

52 week trading range

$90.82 - 105.61

2008 lows

Mid $70's (from low $90's)

Ticker symbol (Yahoo! / Google / Fidelity)

ED-PA / ED-A / ED/PA

There is a good track record here, but I would suggest that one keep an eye out on this until a pull back.

Consolidated Edison is one of the nation's largest investor-owned energy companies, with approximately $13 B in annual revenues and $37 B in assets. The company provides a wide range of energy-related products and services to its customers through the following subsidiaries: Consolidated Edison Company of New York, Inc., a regulated utility providing electric, gas, and steam service in New York City and Westchester County, New York; Consolidated Edison Solutions, Inc., a retail energy supply and services company; Consolidated Edison Energy, Inc., a wholesale energy supply company; and Consolidated Edison Development, Inc., a company that participates in infrastructure projects.

San Diego Gas & Electric (NYSE:SRE) (4.40% Series)

Recent Price

$20.55 per share

Callable?

Anytime at $21.00 per share

Preferred Stock IPO

Jan 1951

Dividends

$0.95 per quarter

All payments made since Q1 2002

Next dividend payment should be on April 16

Record date is in the second week of March

Current yield

4.2%

S&P Rating

BBB+

52 week trading range

$15.70 - 20.99

2008 lows

$14 - 15 (from ~$18)

Ticker symbol (Yahoo! / Google / Fidelity)

SDO/PC / SDO-C / SDO/PC

I believe that this is a solid play for someone looking to add fixed-income exposure without taking on too much risk.

San Diego Gas & Electric provides energy service to 3.5 M people in San Diego and southern Orange counties. Sempra Energy is its holding company.

Great Plains Energy (NYSE:GXP) (3.80% Cumulative)

Recent Price

$86.25 per share

Callable?

Anytime at $103.70 per share

19.8% capital appreciation opportunity

Preferred Stock IPO

Feb. 1947

Dividends

$0.95 per quarter

All payments made since Q1 2002

Next dividend payment should be on March 1

Record date is in the first week of February

Current yield

4.4%

S&P Rating

BB+

52 week trading range

$66.00 - 90.75

2009 lows

Low $60's

Ticker symbol (Yahoo! / Google / Fidelity)

GXP-PA / GXP-A / GXP/PA

This may be rated one notch right below investment grade, but note that, in the post-Lehman turmoil, the share price declined from the upper $70s to the low $60s. This reflects a relatively tame move lower. Go ahead and take a serious look at this, and pull the trigger, if you believe that you can tolerate a medium amount of risk.

Great Plains Energy Incorporated is the holding company of Kansas City Power & Light Company and KCP&L Greater Missouri Operations Company, two of the leading regulated providers of electricity in the Midwest.

CMS Energy (NYSE:CMS) ($4.50 Series Cumulative)

Recent Price

$90.05 per share

Callable?

Anytime at $105.00 per share

14.0% capital appreciation opportunity

Preferred Stock IPO

June 1968

Dividends

$1.125 per quarter

All payments made since Q1 2002

Next dividend payment should be on April 2

Record date is in the first week of March

Current yield

4.9%

S&P Rating

BB

52 week trading range

$77.36 - 92.99

2008 lows

Upper $60's

Ticker symbol (Yahoo! / Google / Fidelity)

CMS-PB / CMS-B / CMS/PB

This is a riskier security, but you should judge its track record since 1968, its tumble from the high $80s to the upper $60s, due to the Lehman Brothers collapse, and consider the 14% capital appreciation opportunity when called. I suggest this for investors with a medium risk profile, looking to shift capital away from equities.

CMS Energy is a Michigan-based company that has an electric and natural gas utility, Consumers Energy, as its primary business, and also owns and operates independent power generation businesses. Consumers Energy provides natural gas and electricity to 6.8 M of Michigan's 10 M residents in all 68 Lower Peninsula counties.

Source: 5 Utility Preferred Stocks That Can Stand The Test Of Time