Retirees Are Collecting 9.5% Monthly From An Overlooked Preferred Stock Fund

"PFFA holds a diversified portfolio of 188 preferred securities issued by corporations. These preferred stocks function as a hybrid between bonds and common equity, with companies issuing them at fixed dividend rates that flow through to PFFA shareholders as monthly distributions. The fund's largest positions reveal a strategic approach to income generation. Financial powerhouses like Apollo Global Management (NYSE:APO) and KKR (NYSE:KKR) anchor the portfolio with their convertible preferreds, providing stability through investment-grade credits."

"Preferred stock valuations move inversely to interest rates, which is the primary risk for PFFA's dividend sustainability. When rates rise, fixed dividends become less attractive and prices fall. When rates fall, preferred stocks typically appreciate because their fixed yields look more compelling. The Federal Reserve's policy shift has created a supportive backdrop for preferred stocks. After aggressive rate hikes peaked in 2023, the Fed pivoted to cuts in 2024, making fixed-income securities more attractive."

The Virtus InfraCap U.S. Preferred Stock ETF yields 9.5% by holding 188 preferred securities that combine bond-like fixed dividends with equity features. The portfolio centers on convertible preferreds from firms such as Apollo Global Management and KKR, offering investment-grade stability, while including higher-yielding energy infrastructure and regional banking positions to raise the distribution rate. Preferred prices move inversely to interest rates, making rate policy the primary risk to dividend sustainability. The Federal Reserve's shift from hikes to cuts in 2024 has supported preferred valuations and lifted PFFA's price, enabling investors to receive high monthly distributions alongside meaningful capital appreciation.

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