Destra Insights

When searching for consistent yield and income, many investors turn to well known asset classes like dividend producing equities, government bonds and municipal bonds. Investors may be well served by also considering preferreds, when looking for stable, higher yields.

On June 25, the Federal Reserve released its 2020 large-bank Stress Test results. For the most part, they were as expected given the severity of the current healthcare crisis and global economic slowdown.

A brief update on the preferred securities market from the team at Flaherty & Crumrine, Incorporated.

What is the difference between preferred and common stock? Preferreds are hybrid securities that blend unique characteristics of both stocks and bonds. This hybrid structure was first introduced in the U.S. by the State of Maryland in 1836 as a solution to fund their local railroad and canal companies. Over time, this structure has evolved and today is a unique hybrid that blends the following unique characteristics.

To understand the potential attractiveness of preferreds, we are going to “take a ride on the B&O Railroad”. Looking back at history may help us gain an understanding of why preferred stocks have been used for nearly two centuries by the wealthy and institutions alike as an attractive alternative and compliment to stocks and bonds, within a well-diversified portfolio.

The team at Flaherty & Crumrine Incorporated recently provided comments surrounding the 2016 presidential election and how it's outcome will impact the Preferred Securities marketplace.