Preferred stocks are an asset class with which many investors aren’t too familiar. Relative to common stocks, the preferred stock market is small, with most issuances coming from real estate investment trusts, banks, utilities and insurance companies.
Preferred stocks typically have odd hyphenated ticker symbols that aren’t as easy to decipher and may vary based on different online trading applications. For example, to check CBL & Associates Properties Inc.’s C-series preferred stock price, one may need to use the ticker CBL+C, CBL-PC, CBL.PC, or CBL.C depending on which website is used to get a price quote.
Many preferred stocks pay attractive dividends and demonstrate less price volatility than common stocks.
In today’s low-rate environment fraught with macroeconomic uncertainties, preferred stocks may be a good investment option for individuals looking to capture a competitive yield and be less susceptible to the inherent risks of common stocks.
However, an investor can get quickly burned in a preferred stock if he or she doesn’t understand the basics of each one they buy.