Preferred Stock Investors: 'Exchange Traded Debt Securities' Offer Same Reward, Lower Risk

Exchange Traded Debt Securities (ETDS) are extremely similar to preferreds stocks - so much so that your broker may actually label them as such. Most ETDS pay quarterly, have a $25 par value, are callable five years after introduction and offer about the same return as preferred stocks. And just as the dividends paid by high quality preferred stocks are classified as interest income, so is that paid by ETDS.

But ETDS are recorded on the company's books as debt rather than equity because they are actually bonds; bonds that trade on the stock exchange under a unique trading symbol just like preferred stocks, rather than the bond market.

There are currently 120 ETDS trading on U.S. stock exchanges, 90 of these on the New York Stock Exchange. While NYSE-traded preferred stocks are currently offering an annual dividend yield of 7.1%, the 90 NYSE-traded ETDS issues are currently offering a 6.8% yield.

Limiting the universe to just the highest quality issues that most risk-averse preferred stock investors seek, the average annual dividend yield from high quality preferreds is 6.9% compared to a very similar 6.7% for high quality ETDS issues...

Note To Readers: This article was chosen to appear on the popular investing website 'Seeking Alpha'.

By clicking here a new window/tab will open on your screen to this article as it appears at SeekingAlpha.com.

Receive my Seeking Alpha articles by email: When viewing one of my articles at Seeking Alpha, click on the "Follow" button under my picture. You will be notified by email when I post a new article to Seeking Alpha.

Please enjoy reading this article at Seeking Alpha.

Many Happy Returns.