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A Must Own 8.5% Yield For Retirees: PFFA


  • Interest rates are near all-time lows.
  • Even though they are likely to rise, yields will remain low relative to historical levels.
  • Fixed income investors like retirees are going to need higher yields to generate income at lower price volatility.
  • Where can you find fixed income investments that have high yields? Preferred equities.
  • We look at the best ETF for preferred shares.
  • Looking for a portfolio of ideas like this one? Members of High Dividend Opportunities get exclusive access to our model portfolio. Learn More »

Co-produced with Beyond Saving

Why Recommend Buying Preferred Shares Now?

For income investors, the preferred stock space is one of the most defensive and conservative ways to get exposure to high-yield stocks. Most of preferred investments will have a "par" value, which is the amount the company owes to the investor to redeem the shares. The most common is $25, although it can be any amount the company wishes to assign. There will be a "call date" – the date after which the company has the right, but not the obligation, to redeem the shares. When the company calls the shares, they will have to pay the par value (usually $25), plus any accrued and unpaid dividends. At times, preferred shares may fall in price when the entire market pulls back. However, most carry much less volatility and recover quickly compared to the common equity. This is the perfect combination for those looking for safer income without the drawback of common stock's large swings.

Preferred Stocks in a Low Interest Rate Environment

If you follow me, you know that I have been singing the praises of preferred equity from the rooftops. Low-interest rates are here to stay for the foreseeable future. Even as they "rise", it will likely be to levels that are much lower than we have seen through most of our lifetimes.

This puts retirees in a precarious position. Fixed income is a crucial component to an income portfolio. After all, the entire point of having an income portfolio is to have relatively stable and predictable income. Historically, retirees have relied on investment-grade bonds and US Treasuries to fill their fixed income portfolio. Today, yields on such investments are incredibly low with quality companies issuing bonds with coupons at 2% or less. One company we follow, W.P. Carey (

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This article was written by

Rida Morwa profile picture
The #1 Service for Income Investors and Retirees, +9% dividend yield.

I am a former Investment and Commercial Banker with over 35 years of experience in the field. I have been advising both individuals and institutional clients on high-yield investment strategies since 1991. I am the lead analyst at High Dividend Opportunities, the #1 service on Seeking Alpha for 6 years running.

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In addition to being a former Certified Public Accountant ("CPA") from the State of Arizona (License # 8693-E), I hold a BS Degree from Indiana University, Bloomington, and a Masters degree from Thunderbird School of Global Management (Arizona). I currently serve as a CEO of Aiko Capital Ltd, an investment research company incorporated in the UK. My Research and Articles have been featured on Forbes, Yahoo Finance, TheStreet, Investing.com, ETFdailynews, NASDAQ.Com, FXEmpire, and of course, on Seeking Alpha. Follow me on this page to get alerts whenever I publish new articles.

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Analyst’s Disclosure: I am/we are long PFFA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Treading Softly, Beyond Saving, PendragonY, and Preferred Stock Trader all are supporting contributors for High Dividend Opportunities. Any recommendation posted in this article is not indefinite. We closely monitor all of our positions. We issue Buy and Sell alerts on our recommendations, which are exclusive to our members.

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