Preferred securities combine features of both fixed income and equity. Preferred securities tend to perform more like traditional fixed income securities because regular income distributions are the principal source of return, as opposed to capital appreciation.
Typically issued at $25 par, most preferred securities are listed on a major stock exchange. Many preferred securities pay quarterly income distributions at a fixed rate and provide the issuer with the option to defer and accumulate dividend payments for a period of time, generally not exceeding five years. However, all preferred securities have preference/seniority to common stock when it comes to the payment of dividends, and issuers generally retain the right to retire securities through redemption provisions.
To help clients select appropriate preferred securities, UBS Financial Advisors have access to preferred securities research written expressly for the individual investor. Our Wealth Management Research team provides: Investment opinions and regular quarterly updates on our universe of preferred securities Strategic assessment of the relative value in the preferred market and recommended allocations geared toward improving total return performance. Educational pieces on the many sub-sectors of the preferred securities market, as well as detailed lists of the preferred securities that belong to each separate sector, their relevant income tax treatment and level of subordination.
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