Long-term capital gain tax rates are going up next year, although we do not yet know by how much nor for whom. This is particularly important to preferred stock investors since preferred stock market prices have increased so much over the last couple of years.
As the Federal Reserve's monetary policies have pushed interest rates down, many savers have fled bank CDs and other similar instruments and turned to high quality preferred stocks. Bank CDs and investment grade corporate bonds are paying about 1.2% and 3.6%, respectively, while high quality preferred stocks are yielding about 6%.
And at the same time that the Fed's policies have decimated savers, many investors holding European assets have shifted their positions to high quality preferreds here.
These two events, occurring simultaneously, have conspired to push up U.S.-issued preferred stock prices. Most preferred stock market prices have increased by about 10% over the last two years or so, leaving most preferred stock investors with significant, but unrealized, capital gains on their shares.
If you haven't looked at your preferred stock portfolio lately, you would be well served to do so before the end of the year...
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As the Federal Reserve's monetary policies have pushed interest rates down, many savers have fled bank CDs and other similar instruments and turned to high quality preferred stocks. Bank CDs and investment grade corporate bonds are paying about 1.2% and 3.6%, respectively, while high quality preferred stocks are yielding about 6%.
And at the same time that the Fed's policies have decimated savers, many investors holding European assets have shifted their positions to high quality preferreds here.
These two events, occurring simultaneously, have conspired to push up U.S.-issued preferred stock prices. Most preferred stock market prices have increased by about 10% over the last two years or so, leaving most preferred stock investors with significant, but unrealized, capital gains on their shares.
If you haven't looked at your preferred stock portfolio lately, you would be well served to do so before the end of the year...
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.
