Due to some interesting timing, 2012 is likely to be a banner year for new preferred stock issues. Because many new preferreds are expected to be introduced throughout the year, it is important for preferred stock investors to understand a little known technique that allows you to purchase newly issued preferred stock shares for a discount.
As I am about to explain, savvy preferred stock investors are able to buy shares of newly issued preferred stocks for a market price below par. It's easy to do but surprisingly few preferred stock investors take advantage of this technique and end up paying more than they need to for their shares.
Most preferred stocks become callable five years after they are first introduced to the marketplace. When retiring (calling) older preferred stock shares companies will frequently issue a new preferred stock at today's lower rates and use the proceeds to call their older, more expensive issues (they refinance)...
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Monday, January 23, 2012
New Preferred Stocks: How To Buy Shares For A Discount Below Par
