I am retired and take educated guesses on all things financial.

June 15, 2010

June 16,2010: Want Income? Here are a few ideas.

For some reason, many investors look for yield in the wrong places. How about those "can't miss" accidental high yields from the likes of BP? Are you satisfied hoping that, over time, yields will grow on common stock when the paradigm is changing before our eyes?

Here are a few preferred stocks that merit attention from income-oriented investors that in most cases will also have some upside call protection.

My favorite is Archer Daniels Midland Preferred A (ADMpA).Yielding 8.57% and trading at $37.62/share, ADMpA has a call at $50.00. It trades an average of 73,000 shares/day. This security has a 52-week trading range of $33.80-$51.81.

Another is HRPT Properties Trust(HRPN). Yielding 7.65% and trading at $19.61/share, HRPT has a call of $20.00. It trades an average of 16,000 shares/day. This security has a trading range since issue of $18.58-20.35.

Prudential Financial Inflation-Linked Notes (PFK). Want yield plus inflation protection? Yielding 4.58% and trading at $24.82/share, PFK has a floating rate based upon the CPI plus 2.40%. It has a call of $25.00. It trades an average of 28,000 shares/day. This security has a 52-week trading range of $17.35-25.51.Of interest, this security pays a monthly dividend.

If one is inclined to look at ETFs, you may wish to explore several of the preferred ETFs such as iShares' PFF ETF, which most readers are familiar with. One not so well known is the Barclays Capital Convertible Securities ETF (CWB), which invests in many interesting convertible securities and has a current yield of 4.74%. CWB trades at $33.21 and pays a monthly dividend. The market cap is 276m.

These ideas may entice you to explore the world of overlooked and not infrequently mispriced preferred securities. Each security has specific characteristics, some good and some dicey. And always remember to avoid market price orders. Know your "limit".

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