iShares S&P U.S. Preferred Stock Index Fund
Preferred stocks are often referred to as “hybrid” securities, since they feature traits of both common stock and bonds. You can read more about them here, but the big takeaway is that this asset class is a dividend dynamo.
The iShares S&P U.S. Preferred Stock Index Fund (PFF) holds 97% of its $11 billion in assets in the preferred shares of more than 300 U.S.-based companies. While preferreds from banks and other financials like HSBC (HSBC) and Wells Fargo (WFC) make up the majority of the fund at 62%, General Motors (GM) preferred stock actually represents the ETF’s largest single holding at just under 3%. Real estate, insurance and utilities also have decent representation in the fund.
PFF is nice in that it pays out distributions on a monthly basis, not quarterly or annually, so strict cash-flow planners should enjoy that little bonus. It’s really nice in that it’s currently yielding almost 6% as of today’s prices. And while expenses aren’t the lowest you’ll find in the ETF world, they’re not bad at just 0.48%, or $48 on every $10,000 invested.