PFFD - Reasons To Consider Adding Preferreds To An Income Portfolio

• While common sources of income like US treasuries, mortgage backed securities, and corporate debt together make up nearly 80% of the fixed income market, preferreds are less than 1% of the overall market.
• While bond and REIT income are taxed as ordinary income, preferred yield is often treated as qualified dividend income.
• Interest rates and credit spreads can drive preferreds' long-term performance. In the short term, technicals can also be a factor.
• If investors are concerned about a stalling economic recovery, focusing on rated preferreds or even subset of just higher rated preferreds can help assuage concerns.

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