MiddleOfRoader

Preferred Dividend ETFs: Shelter from the Storm?

Gary Gordon wrote an article back on Oct. 20 suggesting investors take a look at PFF. The share price was $29 then versus $21 at the close Nov. 20.

I complained then that JPM, BAC, USB and Citi issues were the top 4 holdings. Citigroup VIII has now slipped to the 5th largest holding, at 4.61%.

I suggest waiting until the Citigroup situation is resolved before diving into PFF. In the meantime, I suggest looking at non-financial preferreds.

I have a few shares of Comcast preferreds, CCT, which at $18 yield around 9%. I don't live in a Comcast service area, so I don't have a feel for how heated the battle is with Verizon and other competitors. However, Comcast was still reporting revenue and earnings gains as of the last quarterly report, unlike a lot of other businesses.

Shot on Goal: An ETF Warren Buffett and Wayne Gretzky Might Like

The article doesn't mention that PFF appears to be trading at around a 4% premium to NAV.

Also, PFF is heavily weighted towards financials (88%) with the top 4 positions (22%) in Wells Fargo, Citigroup, JP Morgan and BAC trusts. The article doesn't mention under what conditions, if any, the dividend rate on these could be cut, and what impact the government's preferreds would have on these, if any.