Variable-Rate Preferred Stocks Underperform Their Fixed-Rate Cousins

Over the last ten years, variable-rate preferred stocks have offered consistently lower returns, delivering about half the dividend income as fixed-rate preferreds, at higher risk to investors.

Variable-rate preferred stocks offer the promise of keeping up with interest rates in the event that rates increase. If rates rise, the return paid by variable-rate shares presumably increases as well. There are several variable-rate preferreds trading today that have been around for a decade now, surviving through booms, busts, rising rates, falling rates - you name it. So how has the promise of variable-rate preferred stocks compared to actual performance?...

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