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Russell 2000 Futures
iShares Preferred and Income Securities ETF (PFF)
NasdaqGS - NasdaqGS Real Time Price. Currency in USD
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233 reactions on $PFF conversation
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Latest dividend chart
72% of 2020 dividends were tax free since were 'qualified dividend'... tax paid by issurer.
I'm trying to figure out just how safe preferred etf's are. Just what is the downside risk in owning shares in PFF (or other Pref etf's)? Seems like paying attn to NAV and buying when it is discounted (to NAV) is a foolproof way to get 5.5%+/- on your cash balances with great liquidity on a daily basis. So what could go wrong while holding PFF shares? Seems like if there is a panic crash like Q4 2018, it doesn't take long PFF to snap back to NAV levels. What am I missing?
When you go back and review the charts of the 2008-2009 market upheaval you see what happens when panic and chaos rein supreme. As the FOMC lowered interest rates to zero during that time people sold the good, the bad and the ugly together. It was Indiscriminate selling and what results are opportunities inversely proportional to the indiscriminate selling. This may in fact go lower during the volatile course of price discovery but I will be buying. I started trading and investing in 1975 and have traded through all sorts of market conditions. I will begin buying PFF at this level and will add as the herd sells their mutual funds and ETFs and liquidate to cover margin calls. I recommend anyone and everyone who wants income do the same. It is impossible to call bottoms during panics so going all-in is an impractical approach but buying during intervals when the spreads blow out in market sell offs are the best opportunities. It simply means there aren't enough rational players to make bids.
I wish I could understand why PFF, SPFF, PGF (all similar stocks) are tanking. My previous understanding was they would be vulnerable if interest rates went up. But this is not happening. I assume people are worried about the banking industry. but what? its collapse? I don't know. Or are they dropping like everything else because of the bedlam when investors panic. I bought ZoomM, CLoroX, and AMZN assuming they will do well with the Corona virus shutdown of our society. Still think they will eventually do very well but except for ZM they are being swept up in the Tsunami. But back to PFF. Is the dividend in danger? Maybe, but I checked back in 2008 and 2009 when banks were in terrible danger the dividends kept coming while the stock price halved. It was a great time to buy these stocks, earning 10 11% on their original investment. I hope that will happen again. I just wish I could understand why they are going down now.
This could be a once in a lifetime crash of the markets. I am very anxious for the April distribution. That will tell if the preferreds and utilities are still paying out. The market is predicting that they will not. I still think that PFF will recover quickly as the economy stabilizes. May pick up some more for a long term hold at this level.
I have been watching PFF for awhile. It seems to be more or less steady in spite of wild market swings. The dividend is attractive.
My question is, as time goes on will the preferred it holds get called and replaced with lower paying issues. For those of you with a log more experience, how bad can the dividend get and over what period of time?
I purchased PFF in Sep '17. Just a relatively small amount because I wasn't too familiar with preferred stocks in general, and so wanted to see how it behaved. Because it was a relatively small amount of my portfolio, I have tended to ignore it. Until today. I went back to see how it has performed. The price I purchased shares in Sep'17 was $38.98. The interest earned comes out to about 5% annualized. However, today's price is 34.71, That's a drop of 10.9% overall. Call it a loss of about 3.3% annualized. The bottom l line is that when I look at what I bought and the value today, the increase is only 3.9% since Sept'17. I could have made more during this same period of time by just investing in the "high-yield" CD, where the rates had been over 2% for at least part of the period Sep'17 to present.
You could probably obtain the same information just looking at the prospectus of PFF over the past couple of years, but there is nothing less experiencing it firsthand to be able to judge whether it is a worthwhile investment.
The reason I bring this up is because 1 year CDs are now paying much less than 2%. So, I'm looking to park the "low risk" portion of my portfolio into something other than CDs. And so I looked again at PFF. It doesn't seem very compelling. Even if I was to stick to Preferred stocks, it appears that the Wells Fargo preferred stock ETF (PSK) has been a better performer.
"In a rising interest rate environment, the price of preferred shares will drop, making common shares more attractive." It seems that PFF has behaved just the opposite. The interest rate today is about as low as its ever been, and yet the price is much lower than it was in 2017.
Can anyone make a case for why PFF would be a good place to park funds in the "low risk" portion of one's portfolio?
The July 1st distribution for PFF is .167493 per share. It appears the dividends have stabilized at this level. If it continues going forward, that would return just over $2.00 per share for the next year. At current share price the yield would be about 5.8%.
The April 1st distribution is .173227 per share. That's surprisingly good. Highest since April last year.
March was .160342
February was .163760
This shows that income is still solid.
Would it be better just to buy individual preferred stocks rather than hold this ETF as its yield gradually declines over time?
Whats the plan out there? Hold/Buy/Sell? Bought this for stability but it's becoming frustrating to see it continue to drop. Any long term div gains are being erased by stock decline..
The June 1st distribution for PFF is .169100 per share. Almost exactly the amount as last month. The recent share price increase is nice to see also.
Price always jumps around at end of month. some want dividend and some want price gain instead.
For people who think the div is too low........ or will go lower....... well...... may be you should compare it to what you would get on your mmkt a/c........ and see how many times the Fed would have to raise the interest rates before your mmkt a/c catches up with PFF's div.
Yes this will vary in price and your capital will fluctuate....... so what ? The div. will not be affected.
67% Utility Preferred's This is much safer than common equity. Throwing out the baby with the bathwater.
Remember PFF received preferred dividends. That means the common dividend would be cut first before the preferred.
Not much capital appreciation, but almost 1/2% monthly from PFF is nice. People wait all year for .4% for a CD. Yes, this riskier but I use bad news (down days) to dollar cost average into this ETF.
.05 for April, WTH?
Not that I am complaining but why does the dividend on this fluctuate so much? .1939 for june vs .1659 for april, a whopping 16.6% increase. You wouldn't think the holdings would change that much in 2 months.
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