Destra Insights

We all know how annoying telemarketing calls can be and frankly, many of us just don’t like being called. Well, there is an analogy to that in the investing world, with income securities like preferreds, most of which have provisions that allow them to be called after a certain date at the issuers discretion.

The preferred market space is complex and nuanced. No two preferreds are alike. In this video, Eric Chadwick of Flaherty and Crumrine Incorporated breaks down some specific examples.

While the stock market return over this time has been fantastic and have captured most of the public’s attention, arguably the collapse in yields, and subsequently move in bond prices, has been even more impressive. Please enjoy this short video regarding "A Tale of Two Markets".

In today's relatively low yield environment, many income seekers are looking for more diversification. The hybrid nature of preferred stocks have historically exhibited low correlations to other major asset classes, making them an attractive diversifier to traditional and non traditional fixed-income asset classes.

In the preferred market, call protection allows investors to tolerate lower interest rates for a period of time without reinvestment risk – and we place a high value on call protection in process.

Inflation has been the talk of the town lately. With the increased vaccination rates in the US and the resulting reduction in Covid cases, the US economy has shown signs of a strong reopening move to start the year.

Over half of the preferred securities market is eligible for QDI treatment today. Utilizing QDI eligible preferred securities has the potential to enhance after tax income and total return which can be a very under-appreciated benefit of investing in preferred securities. To learn more about the tax advantages of QDI, please watch the below video.

Preferreds offer investors a number of different potential benefits. Read about the 3 most important ones.

After significantly underperforming their fixed-rate counterparts during the first half of 2020, fixed-float preferreds have nearly closed the gap, particularly with a strong fourth quarter showing.

Preferred stocks may offer potential tax advantages for investors, with high current income both before and after taxes. Preferreds can offer this due to the fact that many of them qualify as being QDI1-eligible. This means that their dividends are taxed at the dividend tax rate, not as ordinary income.