Although the preferred may seem less risky from a principal standpoint, the unit prices will not fare well in a rising rate environment. when rates rise, preferred shares, like bonds, will come under price pressure. be sure to account for this!
Of course you are correct. This is true for BBEPP, as it is for all interest-sensitive investments. Stocks usually don't do well in a "rising-rate" environment either. You're pretty much limited to short-term fixed-rate investments that guarantee return of principal, such as CDs or near-term maturing bonds.
Really. If they don't cut the common share distribution then why would you buy the Preferred? What sense would it make? You pay more for less income. Your distribution gets paid first but if the common shares get stiffed then the share price will drop like a rock and you'll be left holding $25.00 shares.
Preferred just gets paid ahead of common in bankruptcy and in distributions. What kills the return on the preferred is the whiff of interest rate increase which makes the preferred riskier thus pressure to reduce price. Any high yield security comes under the same pressure even the common here. There are usually conditions on preferred stocks such as call backs, conversions, retirement dates.